Goal: Review your miscellaneous/other budget and discover cost saving strategies. Update your budget to reflect this new spending plan.
Why it Matters: In our fast-paced lives, it's easy to overlook the small leaks in our budget. By honing in on miscellaneous expenses, you can regain control over your finances and direct that extra money towards reaching FI faster.
Completion Time: ~10-mins
How to Reduce Your Miscellaneous Expenses: After reading this list, take a look at your spending and identify areas that you can improve.
1. Categorize your miscellaneous expenses into specific subcategories. Every transaction deserves a place in your budget. However, this can be challenging if your miscellaneous expenses aren’t neatly organized.
To overcome this issue, try creating individual subcategories to group miscellaneous expenses into larger buckets.
Question: What if my transactions fall into multiple categories (i.e. shopping for clothes and food with one Costco receipt)?
In this case, you could either separate transactions into their respective categories or create a “catch-all” category for these transactions. Click here to learn how to split transactions and create categories in WizeFi.
Here are some example catch-all spending categories that you can use to expedite the categorization process.
Amazon
Costco
Venmo/Paypal transactions
Cash payments
2. Define a budget for each of these subcategories. Now that you’ve organized and categorized all of your transactions, it’s time to set a budget.
You can start by reviewing your last month’s spending in these subcategories. Over time, you’ll be able to discover new ways to reduce spending and free up more FI dollars from your budget.
3. Reduce your miscellaneous spending. Here are some strategies to help you cut back on other spending.
Wait 24 hours before purchasing items on Amazon. Instead of buying things immediately, let them sit in your shopping cart for 24 hours. Then evaluate if you still need the item. This can reduce impulse purchases.
Separate spending into Needs, Wants, and Nice to Haves. Miscellaneous shopping often falls within the Want and Nice to Have categories. Evaluating potential purchases and only buying Needs can help reduce unnecessary spending.
Withdrawal your cash budget each month and stay within that amount. One way to guarantee you don’t spend more using cash is to limit the amount of cash available on hand.
Your Turn: Now it’s time to modify your miscellaneous budget and free up more FI dollars to accelerate your plan. To view your spending and modify your budget in WizeFi, simply follow this tutorial.
Once you've reduced your miscellaneous expenses, make sure to apply those extra financial independence dollars towards your 4-step plan.
In this example, you can go the 4-step plan and apply an extra $100 towards your Emergency Savings each month.
This one change has allowed this person to reach financial independence over 2 years sooner!
