As rideshare drivers, we have a lot of expenses. But are all of those expenses necessary? Senior RSG contributor Jay Cradeur says no! Here are Jay’s top tips for freeing up extra cash at the end of every month – including Jay’s special ‘Starbucks test’.
January has come and gone and, if you’re like many people, your New Year’s resolutions might not be looking so hot right now. I’ll give you 6 steps to save money. Two big money-savers I’ll explain are the apps:
It’s also that time of year when businesses send out W2s and 1099s – tax time! I don’t know about you, but I don’t like tax time. I am always happy when I have completed my tax returns and dropped them in the mail or e-filed.
While this article isn’t about taxes, it is about helping you manage your finances better in 2020 and beyond.
Looking for RSG’s tax time content? Check out some of our popular, helpful articles on taxes below:
- Your Ultimate Guide to Rideshare Taxes
- How to Quickly and Easily File Your Rideshare Taxes
- Looking for a rideshare CPA to help you with your taxes? Check out our recommended CPA here
In 2020, it is so easy to pay for something once and then later you discover you have a recurring monthly charge. There are a plethora of little tiny fees for things like Netflix and AppleTV which seem small when you sign up.
In this article, I will share the process of giving yourself a financial cleanse so you can cut some of the fat out of your monthly and annual budget.
Step 1 – Start With A Spreadsheet
While there are some apps out there that will allow you to cancel on some of your subscription services, I find the spreadsheet to be the most complete tool.
I use an Excel spreadsheet on my MacBook Pro, but Google Sheets also works well if you don’t have Excel.
Step 2 – Gather All Of Your Data
Our initial goal is to list everything we pay for on a monthly basis.
This can be a bit daunting and even more challenging if you pay for things using different credit cards and bank accounts.
Therefore Step 2 is to gather all your most recent credit card and bank account statements. You can get all of this information online.
If you don’t have online access to all of your accounts, then you will need to dig up your most recent paper statements. That is where all the information is located.
Step #3 – List All Your Charges
Our objective is to go through each of your documents and transfer the reoccurring monthly charges from the statement and onto your spreadsheet.
I found this to be rather illuminating. I have been getting charged for some things that I don’t use anymore.
I could also see that I am paying far more now for some services than I was when I first ordered the service. Regardless, what you want to have is a complete list.
Once you have your complete list, then add those numbers up and see where you are. You may find, as I did, that all these little charges do add up to a good chunk of my monthly budget.
Step 4 – Determine What Stays And What Goes
You need to evaluate your expenses and see what you absolutely have to have, and what can go.
For example, I signed up for Apple TV so I could watch The Morning Show. I had watched the first two episodes for free, loved the show, and then subscribed.
However, since then, I have not watched anything else from that subscription service. Goodbye Apple TV.
As you can see in my spreadsheet, I spend quite a bit on “internet marketing” services for my business. I pay Vimeo $20 a month so they can store my videos and I can easily embed them on my website. However, some of the services I no longer need and can cut.
The Starbucks Test
There are certain items that may seem frivolous, but for a certain individual, they are not.
A case in point is my willingness to spend $4 per day on Starbucks. $4 x 30 days = $120.
I have met people that tell me I can get a perfectly good cup of coffee at the gas station. People like my brother are now making their own cold brews, which saves them money.
But for me, I simply love my Vanilla Sweet Cream Cold Brew at Starbucks. It is an expense I’m happy to pay.
Even when I was in Thailand, I still went to Starbucks a handful of times to get my fix.
When you are evaluating what to keep and what to cut, the question to ask is, does it pass the Starbucks test? Starbucks passes the test. Apple TV does not.
Step 5 – What Can You Keep But Lower The Monthly Amount?
As drivers, you can see how much money you are spending on gas. Many drivers do not plan out their gas purchases and spend far more than they need to on gas.
One excellent option to save money on gas is to use the app GetUpside, which will actually pay you to get your gas at specific gas stations.
Another app you could use to save some money is Rakuten, which is a free reward program that gives customers cashback, coupons and other deals on online and in-store purchases.
Step #6 – Update The Spreadsheet With New Figures
Our goal is to create a new column and insert the updated list of services and anticipated reductions (like reducing your gas expense).
Then you can add up those numbers and see how much of a financial cleanse you were able to give yourself.
Ideally, you were able to see quite a few items that were not essential and you could cut them out of your budget.
In my case, I was able to save about $150 a month just by cutting out services and lowering the cost of some of my other monthly expenses.
Preparation for Tax Time
The other benefit of the financial cleanse is it allows you to get clear on your expenses so that come tax time, you know where you stand. The more sobriety and lack of haziness around your finances will pay big dividends.
This is one reason we recommend using a mileage tracking app so you know your mileage.
Numbers don’t lie.
The number one rule of business is to know your numbers. Once you know your numbers, then you can manage the numbers.
Tax time is around the corner, and the beginning of the year an ideal time to do a little spring cleaning with your finances.
Put in the time. Be thorough. When it comes to cutting out items, be ruthless. If it doesn’t pass the Starbucks test, get rid of it.
At the end of the process, you will most likely have saved some money. Don’t we all love a little bit of extra cabbage? Sure we do.
Drivers, what have you found to cut out of your budget? What’s one thing that always passes your ‘Starbucks test’?
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-Jay @ RSG