Did the freedom that 2022 brought also bring an increase to your spending? Now is an excellent time to reevaluate your expenses and adjust your priorities. For most families, how you spend money is an indication of what is truly important.
How you spend money is an indication of what is truly important.
Begin 2023 with the mindset of prioritizing your financial wellness.
In the spirit of National Mentoring Month, I have assembled 4 key exercises to start your year off right by prioritizing your financial wellness.
Plug the Leaks in Your Expenses (you are here)
Let’s start with something you can do on a rainy or snowy afternoon with a cup of coffee or tea. Iced tea if you are in a sunny locale.
Prioritize Your Financial Wellness by Plugging the Leaks in Your Monthly Expenditures
Paying your bills on time makes up 35% of your FICO score calculation, and automating recurring expenses is an easy way to make sure it gets done. But it is also an easy way to forget what you are spending your money on.
The month of January is a great time to reevaluate subscriptions or services you pay for monthly on a credit card. These run the gambit and can easily be hidden under the umbrella of other services if you aren’t reviewing your spending.
For this exercise I challenge you to look through your spending for subscriptions you no longer need and for alternate services that may be less expensive in the long run.
#1 Smart-Phone/Device Subscriptions
The top 100 subscription apps worldwide earned $18.3 billion in revenue. How much are you spending annually? Is it on things you don’t really need?
Apple Users: iTunes App Store Subscriptions
Android Users: Google Play Subscriptions
Look through your smart-phone apps and unsubscribe to the ones you don’t use.
#2 Food and Home Essentials
Grocery and homegood delivery services make life more convenient. But are you getting your dollar’s worth? Or are you spending more on things you don’t really use?
Grocery Services
Meal Delivery Services
Olive oil of the month club
Wine/Coffee/Tea of the Month Club
Autoship subscriptions bring a regular supply of the same products you use constantly — think coffee beans or paper towels. Can you save money by switching from Amazon Prime to Walmart for staple products? Do you really cook all of those meals being delivered weekly?
#3 Utility and Banking
Essential services help to keep you safe or make your life easier.
Mobile phone service
Road I.D. for bicyclists
Roadside assistance
Credit cards with an annual fee
Cloud based virtual storage
Evaluate whether bundling your subscriptions can save you money. Or whether you are paying for duplicate services. For example, many auto insurance policies include roadside assistance services. Are you making the most of your credit card perks, or can you cut up a few cards?
#4 Streaming Services & other Entertainment Subscriptions
Video services like Hulu, Netflix, HBOMax, Disney+, Showtime and AMC
Streaming music services like Apple Music, Spotify, Pandora, and Prime Music
Magazine subscriptions
Consider whether you really view or play all of these entertainment services.
#4 Home Security Services
Home security services with a monthly fee
Ring doorbell
VPN network
Data encryption services
Consider asking for a discount or shopping for a less expensive alternative
How to Take Action
During January, I gather all my information for the year to prepare my income and expense report for the calendar year. As part of that process, I download a full year’s credit card statements. This report shows all of your spending by category for the calendar year. I challenge you to do that with your credit cards and identify one or more recurring charges that you can drop during 2023. After all, do you really need subscriptions to three different music services? Or can you live with one?
You’d be surprised how recurring expenses can add up.
You’d be surprised how recurring expenses can add up. During 2022, our internet service increased their monthly fees. I called and negotiated a $40 a month discount, saving $480 this year. I also dropped a couple magazine subscriptions because I enjoy visiting the Champaign Public Library to peruse the new fiction section and flip through a few magazines.
I challenge you to see if you can save at least $1,000 during 2023 by eliminating or reducing some of your recurring subscription costs.
Final thought.
Are you comfortable with your progress towards retirement? How about helping future generations meet their financial goals? If you have more than $2 million saved and need help from a wealth manager, the Peak Wealth Planning team can assist.
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About the Author
Peter Newman is a Chartered Financial Advisor (CFA) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind.
Peak Wealth Planning provides concierge services to meet your wealth management needs. Services include: financial planning, investment management, esop diversification, retirement income, insurance, and estate planning advice. Peak Wealth Planning is a fee-based financial advisor based in Champaign, Illinois, and Fraser, Colorado.