Achieving your monetary goals is your own personal project. There are no one-fits-it-all solutions that will work for everyone. Different individuals will have different starting conditions, different incomes, different spending patterns and different priorities and goals when it comes to their finances. Thus, you will have to sit down and define your monetary goals and how to get there. The first step in the process is becoming aware of your monthly spendings so you can analyse and monitor them and regularly check if you are still on track to achieve your goals.
A first step to help tracking your expenses is to pay whenever possible using your credit or debit card. This will allow you to go through your account statement at the end of the month and sum up all the expenses that you incurred, grouped by their category. You can use an excel spreadsheet to group and sum up expenses by month and category. Since your spending habits will be different from others, it might be neccessary to define your own categories and experiment with the setup. Categories included in a typical monthly financial report include your salary, rent/ mortage, invested money, insurance fees (health-, accident-, indemnity-,...), hygiene & beauty, groceries, home improvement (furniture, electronics, kitchen utensils,...), medical treatment, clothing, utilities, telecommunication (phone contract, streaming subscription, internet provider, TV fees,...), transportation/ commuting, bank fees, entertainment/ leisure.
Once you have a clear overview over your monthly expenses in this tabular form, you can easily identify months in which you went over your budget or spent more than usual in certain categories. Additionally, you can go through the categories and reconsider whether the goods and services you are getting are worth the money that you are spending on them. There are only two ways to improve your finances and that is earning more or spending less. We will now go through each of the above categories in the monthly plan and discuss if it is possible to reduce the current spending and under which circumstances you should not.
Salary: One way to improve your financials is to increase your income. However, salaries are usually constant on a month-over-month basis. However, depending on your industry, yearly salary increases could be appropriate. A great way to discover how much people in your position and area typically make is to use tools such as glassdoor. Yearly increases - if happening at all - will usually just be enough to keep up with inflation and your purchasing power will remain unaffected. Thus, if you provide high value to your company, have a lot of experience in your position or regularly work longer or do more than your contractual obligation, you might have a good foundation to discuss a salary increase or promotion with your manager. Higher wages are often associated with higher value that the employee provides to the company, so your starting point should be the value that you provide and your atitude and motivation towards work. Moreover, it should be mentioned that nowadays switching companies regularly provides quicker and higher salary increases then working oneself up the company ladder within the same company (Forbes).
Rent & Transportation: There is typically not too much you can do to lower the rent you are paying as it rather increases over time. However, it is good practice to stay updated on the real estate prices in one's area. One way to save money is to consider moving to a potentially cheaper apartment that might even have more to offer. Furthermore, moving away from the city centre and towards the suburbs or the country side is a good way to afford a bigger apartment for less money. Nonetheless, you should also consider the additional money and time spent for commuting on a daily basis that comes with moving away from the city. Depending on your job, you might be able to minimise commuting costs by working from home some days each week. If you live close to your work place, you can also subsitute the daily car or public transport journey with a refreshing bike trip to stay active, protect the climate and save some money.
Investment: You should invest a certain fraction of your paycheck each month. That investment can be into a pension fund, stocks, bonds or others. If you do not have money to invest each month, you are living beyond your means and should either move to a cheaper apartment or find other ways to reduce your spendings. Having money on the side each month and being able to either increase your bank account this way or investing it is the only way to steadily improve your financial situation and your standard of living.
Insurance: Insurances such as health-, accident- or indemnity insurance are mandatory in many countries, so not having them is not an option. Other insurances however, such as extended warranties, mobile phone and travel insurances might drain your wallet unnecessarily. You should carefully examine which insurances are required for your current live situation and drop the rest. In addition, it pays off to use comparison tools to regularly screen the insurance market and ensure you are not overpaying on your mandatory insurances. Depending on your region, different comparison tools are available, such as thezebra.com (US), check24.de (Germany) or comparis.ch (Switzerland). Switching provider from time to time can definitely pay off.
Hygiene & Beauty: This category includes products such as soaps and cremes. Frankly, you do not want to make compromises in this category. Please do not start using less soap or deodorant in an attempt to save money. However, if you are using products of expensive brands, but are not sure whether they are really worth it, it could pay off to ask your doctor during the next visit what they think about this product. You might already have the best solution for you, but maybe they can recommend you something even better for a competitive price.
Groceries: Another category that is essential. Some people have tried to make compromises on this category by switching their diet to cheap fast food, frozen products and evaluating the carbohydrate-to-price ratio for food before buying the seemingly best. I would not advice to make compromises on food. You should keep (or start) eating what you like and what is healthy. The few dollars that you can save by buying cheap food come at the cost of you being demotivated, sick and unhealthy which all lower your productivity and increase your future medical bills. A healthy and balanced diet should be a top priority. That said, it can pay off to compare the prices of your shopping basket regulars between different supermarkets, to ensure you are not overpaying for it. Additionally, several supermarkets nowadays have bonus and reward systems in place, which can provide another small relief for your wallet.
Home improvement: This category is composed of furniture, screens, decoration and others used to improve the appearance of your home. While some of these products can be considered essential, such as a bed and kitchen table, others such as the 5th painting on the wall or a massage chair might be avoidable expenses. Despite most items in this category being somewhat essential, it is possible to live for some months without most of them. Doing so you can give yourself time to earn some more money and buy items little by little, without further draining your bank account the moment you move to a bigger apartment or house.
Medical costs: This category is highly country specific and depends on the health insurance plan you have. In general, many medical services and therewith expenses are essential and should be given high priority. Nonetheless, also here it can be a good idea to compare prices and services between different medical practicioners. Many practitioners registered and/ or ranked on websites such as google maps, zocdoc or yelp.
Clothing: While a minimum set of trousers, shirts, sweater, jackets and others is essential, few categories have such wide margins between the cheapest and most expensive option. By avoiding expensive brands and focusing on the essentials you can save more money. Depending on your job and level of customer interaction it might be advisable to invest in some nice clothes, however you should not make the mistake of staying poor trying to look rich. Some of the richest people on the planet could not care less about expensive clothes and dress super casual, including Marc Zuckerberg and Steve Jobs.
Utilities: Utilities such as gas, water and electricity are a basic need for living in a modern society. However there are also some ways to reduce spending on these. If you own a home you can consider installing solar pannels and use solar energy, either to generate some of the electricity you are using yourself, heat up your water, or let your electricity flow into the public grid and earn some money doing so. Additionally, in some countries there are different prices for electricity, depending on the time of the day. Thus, letting the washing machine run over night might be cheaper. Water usage can also be reduced by bathing less often and showering more or reusing water from washing your vegetables to water your plants.
Telecom: The telecommunication category includes fees for your mobile phone contract, wired internet connection, streaming services and music subscriptions and radio/ TV license fee. Many people are surprised by how much can be saved in this category. Instead of paying a monthly fee for wired internet, you can get a mobile phone contract with unlimited mobile data and use your phone as a hotspot to connect all your other devices to the internet. Streaming services such as Netflix, Disney+ or Amazon Prime can also be replaced by legal and free solutions such as rakuten.tv. Many TV programs can be watched online for free or at least cheaper and with ads using apps such as zattoo. Spotify and YouTube also offer great services for free if you do not mind seeing some ads.
Entertainment/ Leisure: Encompasses your hobbies, free time activities and vacations. Since this is a highly generic topic, general advice is of limited use. Nonetheless it is still good to keep track of these expenses and limit the number of restaurant visits, skiing trips or long distance travels should the costs be affecting your monetary goals too negatively.