How To Change Your Spending Habits
Like any habit, those involving spending can be tough to break. On top of that, negative spending habits can be a real detriment to your life, particularly if you’re looking to secure a loan for any major purchase. However, there are some easy ways to break these bad habits while laying the groundwork for a more secure financial future in the process.
Here’s a look at six relatively easy ways you can change your spending habits, along with some new habits to hopefully pick up along the way.
Track Your Spending
One of the biggest changes you can make to better spending is tracking where your money goes. While it might sound counterintuitive to start off by paying attention to the money you’ve already spent, it’s a critical step to getting a clear picture of where it’s going. Once you do, it can be surprisingly easy to rethink those habits that really add up.
To get started, most banks and credit unions will have some feature available on their website that allows you to categorize your spending. And that’s in addition to any number of apps designed for this exact purpose. If you start on the 1st, track the at least previous month’s spending. This will paint a much more vivid picture of where your money ends up every month, and you can start making adjustments from there.
Budget For the Next Month
While tracking your spending starts by looking back, creating a budget for the upcoming month ahead can also help steer you in the right direction as you start to look forward. Start with the necessities, like rent/mortgage, utilities, and other expenses. Then, be mindful about what remains and set aside what you can for saving. Of course, you still get to have some flexibility when it comes to entertainment.
With this budget laid out in advance, you’ll be more likely to stick to the plan. This includes setting aside money to save every month and then actually following through with it.
Check Your Impulses
Certain things can trigger the need to impulse buy. Whether it’s certain places or websites, a certain time of day or a specific kind of mood you find yourself in, simply being aware of these factors can be a big help. This way you can help curb that itchy spending finger the next time they come about.
Stick to Cash
Cash can be inconvenient, especially in an increasingly digital world, but it can do a lot to help keep your spending under control. After all, when you only allow yourself a finite amount, that means there’s only so much to burn through on impulse purchases and other non-essential things.
Failing actual cash, you can opt for debit cards that deduct purchases directly from your checking account. Some even set daily spending limits to help keep those triggers in check.
Assign Jobs to Your Dollars
A big pitfall for a lot of people is spending the money you have left after all the bills are paid. As in, all the money left over. This is obviously a big hindrance to long-term saving, and a generally bad habit to get into, and a worse one to keep.
By assigning each dollar coming in per month a ‘job,’ it reigns in this type of thinking – and the spending that results. If every dollar is assigned to ‘rent’ or ‘bills’ or ‘savings,’ then there’s less money just sitting around waiting to be spent. Of course, you can also assign some of these dollars fun jobs, like for your entertainment budget.
Set Realistic Financial Goals
A lot of this advice can hinge on this last point. Without any short- or long-term goals in mind, it becomes pretty easy to stray from the path of responsible spending.
After you’ve got your monthly budget set, see how much you have leftover, and set one realistic goal. It can also be helpful to have something specific to work toward, like paying off a loan, buying a new car, or planning for retirement. You can also research different types of accounts that are designed around your saving needs to help you get the most bang for your buck. Any bank or financial institution will be able to help guide you down the right path to help make these goals attainable.
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Last updated: Oct. 15, 2021