Lifestyle

Find More Fun in Your Finances: A Review of Automatic Payments

July 23, 2024

Financial freedom isn’t just about restricting yourself. It’s about striking a balance between saving for the future and enjoying the present. While some financial advisors advocate for complete frugality, many young adults desire a more balanced approach that incorporates experiences alongside saving goals.

Steve Short and Mark Schilpman believe that financial freedom is achievable without sacrificing all enjoyment. Their book, which is an Amazon best seller with the help of the foreward by Will Ferrell, “The Simple Road Toward Financial Freedom,” outlines a practical approach focused on easy-to-follow concepts. They challenge the notion that accumulating a large sum requires extreme deprivation.

This article explores how reviewing automatic monthly payments can free up extra cash for the fun stuff in life, all while adhering to sound financial principles.

The Power of Reevaluation

Life changes, and so should your budget. Subscriptions and services signed up for months or even years ago might not be relevant today. Reviewing your automatic payments is a powerful financial exercise that can uncover hidden expenses and free up cash for your goals.

Here’s how to get started:

Gather Your Statements: Collect bank statements and receipts for the past few months.
Identify Automatic Payments: Make a list of all recurring charges, including subscriptions, memberships, and service fees.
Evaluate Each Expense: Ask yourself:
- Do I still use this service?
- Is there a cheaper alternative available?
- Can I cancel and resubscribe later if needed?

Reigning in Forgotten Expenses

Streaming Services: With so many platforms offering various shows and movies, it’s easy to subscribe to multiple ones. Consider rotating subscriptions or consolidating them onto a single platform.
Unused Gym Memberships: Are you paying for a gym you rarely visit? Look for free workout options online or explore budget-friendly exercise alternatives.
Subscription Boxes: Subscription boxes can be fun, but they can also add up. Evaluate if the contents justify the cost.

Remember that every decision you make is a trade-off. Steve Short and Mark Schilpman explain it this way, when it comes to making financial decisions, consider the costs of both options. For example, if you’re considering buying a new car because you’re able to, or keep the car you have that still operates well. In this case, just because you have the means to upgrade the car, the purchase is not necessary, when you could continue to invest and save.

Beyond Savings: The Power of Reallocated Funds

By eliminating unnecessary subscriptions, you free up extra cash each month. Here are some ways to utilize these newfound funds:

Boost Your Savings: Increase contributions to your emergency fund or retirement savings.
Invest in Experiences: Allocate a portion towards travel, hobbies, or events that enrich your life.
Build a Buffer: Create a sinking fund for unexpected expenses, preventing them from derailing your financial goals.

Finding Balance with the 50/20/30 Plan

Their book, “The Simple Road Toward Financial Freedom,” introduces the 50/20/30 plan, a practical framework for managing your finances. This approach prioritizes saving for the future while allowing room for you to enjoy your life today.

Here’s how the 50/20/30 plan works:

50% Needs: This portion covers essential expenses you can’t avoid, such as rent or mortgage payments, groceries, utilities, transportation, and minimum debt payments.
20% Savings: This crucial category fuels your future goals. Allocate funds towards your emergency fund, retirement savings, or a down payment on a house.
30% Wants: This section is dedicated to your discretionary spending. It’s the money you can use for entertainment, dining out, hobbies, subscriptions, or travel experiences.

The beauty of the 50/20/30 plan lies in its flexibility. Unlike some restrictive budgeting methods, it allows you to indulge in some of the things you enjoy without guilt. The key is to prioritize needs and saving first, ensuring your financial security remains on track.

Making the 50/20/30 Plan Work for You

Here are some tips to implement the 50/20/30 plan effectively:

Track Your Spending: Monitor your income and expenses to understand where your money goes. Many budgeting apps and tools can simplify this process.
Set Realistic Goals: Having clear financial goals, whether it’s a dream vacation or a comfortable retirement, motivates you to stay on track.
Review Regularly: Just like reviewing automatic payments, revisit your budget periodically. Adjust spending allocations as needed based on your evolving needs and goals.

Remember, the 50/20/30 plan is a guideline, not a rigid rule. The percentages can be tweaked slightly to reflect your unique circumstances. The core principle is to prioritize saving while incorporating some flexibility for the things that bring you joy.

By combining a review of automatic payments with the 50/20/30 plan, you can take control of your finances and free up extra cash to create a life you love, without sacrificing your future security.

The Simple Road to Financial Freedom

The key to financial freedom is finding a system that works for you. By incorporating a balanced approach that prioritizes saving alongside enjoying life’s experiences, you can achieve your financial goals without feeling deprived. Regularly reviewing your automatic payments ensures your money is going towards what matters most to you, empowering you to take control of your financial future.

Ready to Take Control?

Visit their website, Simple Road Book, to learn more about their financial philosophy and practical tools to help you achieve your financial goals. The book can be found at Amazon, Barnes & Noble, WalMart or can be purchased with a promotional rate at: https://bit.ly/3VN7zMD