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Do you follow a budget? If you do, you've already taken the first step toward improving your financial picture.
But what if you're still not stashing as much money in your savings account as you'd like, or you're grappling with costly debt you're just itching to pay off? If that's the case, you may need to overhaul your budget, and the start of a new year is a great time to make adjustments. Here are a few changes that could have a huge impact on your finances in 2021.
1. Unload a car
Having a car is convenient, and in some parts of the country, it's an unquestionable necessity. But if you live someplace with access to public transportation, you stand to cut your costs tremendously by getting rid of a car and using buses or trains instead.
It costs $773.50 a month to own a car, reports AAA. Compare that with some cities where you can buy an unlimited monthly public transit pass for under $200. Of course, not having a car means lugging groceries home on public transport. Or waiting in the cold for a bus to show up during winter to get you to work. And those aren't easy things to do. But if you're willing to make the sacrifice, you could enjoy some serious savings.
2. Stop dining out
It's common for restaurants to charge a 300% markup on the meals they serve. That means a $40 check at your favorite eatery could instead cost $10 if you were to prepare the same meal at home. If restaurant meals comprise a huge chunk of your spending, that's one expense you may want to slash in the coming year.
Now, this doesn't mean you can't dine out ever. But if you're in the habit of dining out twice a week, you might consider limiting yourself to twice a month instead. Or, better yet, reserve those restaurant meals for special occasions, like birthdays and anniversaries only. Incidentally, ordering takeout or delivery counts as dining out (even if you're technically dining inside your home), so you'll need to be just as judicious with those meals.
3. Skip the big vacation
Traveling is fun, and it's a great way to enjoy new experiences. But if you typically allocate a large chunk of money in your budget for travel, you may want to scale back next year. Focus on your savings goals instead. Swapping a resort stay for a low-key camping trip could put thousands back in your pocket -- and you'll still have a fun getaway. Or, find a middle ground. Book that resort for five days instead of 10, and travel at off-peak times to keep your costs down.
You'll often hear that small changes in your budget can go a long way, and there's certainly truth to that. But if you have major financial goals to tackle next year, like building a solid emergency fund or shedding nagging debt, then you'll need to go bigger. These changes will help you close out 2021 in a much healthier place -- and buy you more financial leeway going into 2022.