This story was originally published on Oct 27, 2017.
You took our quiz and are finally coming to terms with the fact that the little treats are holding you back from achieving your bigger financial goals. The good news: Small changes to your bad money habits will yield huge results. Tackle these first, and then start dreaming big (maybe a year abroad?).
Work on setting up an emergency fund.
The first step to a strong financial foundation is setting aside three-to-six months’ worth of your fixed expenses in an emergency fund. That amount may seem totally overwhelming at first, so consider leveraging technology to begin saving up. There are lots of helpful apps out there, which can help you achieve short-term goals like building an emergency fund or setting aside money for a big trip.
Take baby steps when it comes to your spendy habits.
Start by doing a money diary. (You don’t have to publish it!) Have a look at what you’ve been buying, and then make a concerted effort to dial down your spending one step at a time. If you can’t resist the lure of leaving the office every day to buy lunch, try packing it once a week and eating in a local park. If expensive workout classes are your kryptonite, swap out one of your regular sessions for a free community class or a home workout using a YouTube video (and make your roommate join you). Experiment with making matcha lattes at home instead of grabbing one at the coffee place on the corner. Once you see how much you’re saving through these simple swaps, you won’t be sorry.
Think about some bigger expenditures you plan to make in the next year or so, like a fun girls’ trip, or presents for your family during the holidays. Consider opening a new savings account for each goal, and set up an auto-transfer from your checking account on a weekly or monthly basis (just make sure to aware of any fees or balance minimums before opening). If you usually spend about $500 on holiday gifts for your extended family, automate transferring $41 each month or $10 each week. When the holidays roll around, you’ll have the cash in hand and won’t be tempted to go into credit card debt.
Start dreaming big.
If you’re finding it hard to let go of your small expenditures, try putting them in context. Figure out your hourly salary, and calculate how many hours you’d have to work to afford your third bottomless boozy brunch this month. Is it worth it? On the flip side, think about something you’ve always wanted — maybe it’s a trip to Paris or a surprise for one of your parents. Then calculate how long it would take for you to be able to afford it if you stopped spending so much on the little things. Having a big goal in mind will keep you motivated. That doesn’t mean you should stop treating yourself entirely, but thinking about the big picture will make it so much easier to get your finances in check.