Spending money is something that we all do, often on a daily basis.
Unless you happen to live in the woods and live off the land, there’s a good chance that you’re constantly spending cash on things like utilities, rent, food, and more. This means that you need a plan of action to ensure that the amount of money you have coming into your household, isn’t less than the amount you have to spend.
While you can’t simply “give up” spending, you can reduce some of the bad habits that might be draining your finances faster than necessary. Replacing bad spending behaviours with good ones ensures that you have a strong and sustainable strategy for the future, to help you reach your savings goals and accomplish more with your cash.
Start by Deciding Which Habits You Need to Break
In this article, we’re going to look at some of the good habits you can implement to replace your bad spending behaviours.
However, before you can start adjusting your spending strategies, it’s important to think carefully about the current problems you’re facing with money, and the goals you hope to accomplish as you adjust your budgeting practices. For instance, you might want to stop:
• Going into the overdraft in your bank account
• Over-spending on your credit card
• Making impulsive purchases instead of saving
• Buying items that you only use once
• Eating out when you already have food in the freezer
When you know what your bad spending habits are, it’s much easier to implement a plan that will help you to overcome them and get back on track towards better financial health. Once you’ve defined your bad spending habits, try replacing them with the following “good” habits.
1. Give Yourself A Goal
If impulse spending means that you end up buying items you don’t need in sales because you’re bored, or over-spending in the grocery store because you forgot to write a list again, a good way to eliminate that bad habit is to give yourself a goal. When you have a reason in place to help you spend more wisely, you’re less likely to veer off track.
For instance, if you want to save up for a deposit on a house, you can put a picture of a house in your wallet, over your credit and debit cards, to remind you of what you’re trying to accomplish every time you’re tempted to spend.
2. Live on a Budget
One of the main reasons that people over-spend or end up in their overdraft each month, is because they forget to properly track their spending. If you find that you’re always getting yourself into more debt, then make sure that you put systems in place that will help you to track the cash you use.
Start by getting a few statements and figuring out how much you generally earn and spend each month, then look for places where you can begin to cut down. Give yourself spending allowances for each area in your budget, including “entertainment” and “food”, then track your bills to make sure that you don’t go over your limit.
3. Research Before you Shop
Another way to reduce your risk of overspending and limit impulse buying, is to commit to researching every significant item you want to purchase before you buy it. You might not need to research every item on your grocery list, but for anything that costs more than £10, head online and see whether you can get a better deal elsewhere.
At the same time, remember to look for upcoming sales that might reduce the price of the item you want. Sometimes, improving your spending habits simply means replacing the urge to buy with patience. Pushing yourself to wait longer for an item you need (if you can), will save you a lot of cash.
4. Avoid Spending Triggers
Changing something as deeply ingrained into your personality as your spending habits can be difficult. One thing that makes the process even more challenging, are your personal triggers. We all have areas where we struggle to manage our money. Some people can’t help but grab their wallet when they see a clothing sale, whereas others love spending cash on nights out with friends.
Find out where you’re most likely to fall into bad spending habits and avoid those triggers wherever you can. For instance, if you often overspend when you go drinking with friends, try taking just cash with you for the night. That way you won’t be able to start using your credit card when you run out of cash.