January, the month everyone heads to the gym to work on their fitness goals, but by March the majority are back to their old ways. The same goes for financial goals. We don’t want to return to our old habits and end up in a worse financial position come December 31 than at the beginning of the year. With that in mind, evaluating your budget is imperative. It’s been a few months since the beginning of the year and hopefully you have been tracking your spending thus far, which means it’s the perfect time to find those areas where you can stretch the dollars in your budget.

The first step in trimming the fat from your budget is identifying where you are spending all your monthly income. The best way to do this is to track where every penny in your bank account goes for a three-month period. While this may seem tedious, it is the only way to find out if you are frittering away hundreds of dollars on lattes, fast food, clothing, or whatever your vice is.

When you take a look back at your spending, you will be able to identify the areas that do not line up with what you have budgeted for. Common areas where people overspend include eating out, expensive coffee drinks, and clothing.

When you have a bad day, it’s easy to pity yourself and chalk up your impulse spending to a need for retail therapy. However, it can be detrimental to balancing your budget and paying off your debt as soon as you can. If you can identify what is straining your budget, you can make a plan to change your habits. The best way to do this is to give yourself an allowance for things you enjoy. Perhaps $25 a month for coffee is enough instead of the $40 you were spending in the past or maybe you can even invest in a coffee maker for your home. It may not seem like a lot, but over time it will add up to extra money you can throw at your debt to become debt-free faster.

READ MORE  Investment Options as Part of Your Retirement Strategy

If you don’t have a vice that is draining away all of your dollars, perhaps it’s your fixed costs that are eating up all the money in your budget.

Groceries are definitely a place where we tend to overspend. Creating a meal plan is a great way to only buy the things you need every week. Making a list is another great way to make sure you aren’t overbuying on impulse items. Implementing a vegetarian day is another great way to cut the cost of meat, which is typically the most expensive thing when it comes to grocery shopping. By implementing both of these tactics you should be able to cut your budget by a quarter just by avoiding buying things you doing need.

Electricity is probably the highest of your utilities and can suck the life out of your budget. By installing energy efficient light bulbs in your home, you can save some moolah each month. If your electricity costs are excessive, you should consider hiring an electrician to see if an outlet is causing a problem. The short-term cost of hiring an electrician could save you bundles of money in the long term.

Lastly, if your rent is astronomical, perhaps consider getting a roommate to temper your budget or moving to a less expensive neighborhood.

There is no reason that a twenty-something should be going into consumer debt. By cutting your living expenses and reducing spending on your vices, you should be able to balance your budget each month and be that much closer to your long-term financial goals.

READ MORE  The "no-spend week" challenge