15 Ideas to Control Your Spending Habits
Learning to handle your money effectively can be quite a challenge, especially if you are young and earning more than you need. Regardless of your age or income, it's vital that you find a way to make the most of your money as this will put you in a far better financial position for both the short and long term. If you are tired of being broke in the middle of the month and having little to show for all your work, here are a few good tips to help you control those bad habits.
1. Track Your Spending
The first step to getting your finances under control is to find a way to track them, because until you know what you are doing with your money it will be impossible to make positive changes. So whether you start writing down your expenses in a book or using software to keep track, make it a habit to keep a record of every dollar you spend. By tracking your money it will quickly become apparent exactly where it is all going, which will at least let you know where changes can and should be made.
2. Make a Budget
Budgeting is a crucial part of good financial management; so if you don’t have one already, draw up a budget for your monthly expenditure. There are plenty of sample budgets online to help you get inspired, but remember to factor some flexibility into each of your financial goals to ensure that you can stick to them. It is wise to budget for items such as savings and emergencies as well, as even putting aside a small amount each month can mean you build up your reserve funds quite quickly.
3. Automate Your Savings
One of the best ways to ensure you are saving is to have your bank automatically transfer money into your savings account as soon as you get paid. By automating your savings you will become accustomed to having less money to play with, and you’ll thank your automated approach if you ever need that extra money or want to make a major purchase.
4. Put Strict Limits on Withdrawals
Some people go on impulse spending sprees that cost them hundreds or thousands of dollars at a time. An effective way to prevent this from happening to you is to put limits on your bank accounts that prevent you from spending more than a set amount per day, week or month. While you will always have the ability to change these limits, you will hopefully have overcome your urge to spend before you have time to alter those restrictions.
5. Invest any Extra Money
If you have more money than you need and tend to waste a considerable amount as a result, consider putting some of that extra money into investments. Using your excess money to make more is a great way to start securing your financial future, and there is no shortage of lucrative investment opportunities available. Regardless of whether you plan on investing in stocks, art or real estate, get advice on your investment options first; otherwise you may just be finding a new way to waste your money.
6. Throw Away Your Credit Cards
While credit cards can be extremely useful at times, they are a trap for those who have trouble controlling their money. If you can’t control your spending it is a good idea to throw away your credit cards, because unless you can afford to make a purchase with your own money you really can’t afford to make the purchase. Many debit cards now offer the same advantages as credit cards, with the exception that you can only use your own funds, making them a far smarter option for those who are bad with money.
7. Only Carry Cash
These days it is extremely easy to access your money via your various banking cards; however, this can be quite dangerous for those who are unable to control themselves. To make sure that you aren’t dipping into money that you shouldn’t be, leave your cards at home and start carrying cash instead. Decide before you go out how much money you will need and take that amount of cash with you, as this way there is no possibility that you will overspend.
8. Get Help from Your Mates
Overspending is just like any other addiction and it will take a considerable effort to break the habit; however, enlisting the help of your mates can make a huge difference. If the people closest to you know that you are making an effort to spend less they may be able to intervene if they see you starting to get out of control. Having the support and encouragement of friends and family is more often than not the key to beating addiction.
9. Avoid Known Triggers
People who are bad with money generally tend to spend it on similar things each time, and often these purchases are associated with being in certain situations. Whether you spend your money on clothes, shoes, alcohol or gambling; an effective way to reduce your overspending is to avoid the people or places that trigger your spending sprees. Until you can get your bad habits firmly under control, it is best to avoid your known triggers altogether if possible.
10. Get a Money Manager
Some people will make poor financial decisions every chance they get, and if you are this type of person it is smart to have someone else handle your money for you. Whether you have a trusted friend take care of your funds or pay a professional to do it, having someone else managing your finances may well prevent you from ending up broke.
11. Enforce a Cooling Off Period
People with poor spending habits often make purchases extremely quickly, before they have properly considered whether or not it is actually a worthwhile use of their money. A great way to avoid these spur of the moment decisions is to establish a rule where you don’t buy anything over a certain amount without first taking some time to consider it. The longer your ‘cooling off’ period is the less likely you are to make unwise purchases.
12. Use Lists
An extremely effective way to reduce unnecessary spending is to make a list of items you want or need to buy before you leave home to do your shopping. Regardless of whether you are shopping for clothes, tools or groceries; only buy things that are on your list, even if other items are extremely tempting. By taking a ‘list items only’ approach to your shopping you will be far less likely to waste money on impulse purchases that you don’t need.
13. Centralize Your Spending
Using multiple payment methods can make it easy to overspend, as you are less likely to notice your money flowing away from you if it is in small amounts here and there in a number of different forms. Centralizing your spending to one primary method, for instance only using debit or cheques, will make it easier for you to notice your expenditure adding up, especially when you get your statement at the end of the month.
14. Learn the Tricks of Marketing
A lot of time, thought and planning goes into trying to make people spend their money, so it is little wonder that some people are unable to control themselves. The more you know about marketing the less power it will have over you, so for the sake of your bank balance it is well worth learning how the various tricks and ploys work. Tactics such as using certain colours, product placement and deals have been shown to increase sales, but if you know what they are trying to do you’ll be far less likely to fall victim to these traps.
15. Set Realistic Long Term Financial Goals
Once you have your spending under control, chipping away at long term financial goals is a wonderful way to stay motivated about good financial management. Remember that many self-made millionaires actually have modest incomes; they have simply saved, compounded their savings through good investment and stuck to sound and realistic financial goals. So ensure your goals, both short and long term, are crystal clear and appropriate to your income.
Good spending habits take time to develop and require that you are fully committed to them. The benefit of learning to manage your money wisely will be that you’ll get far more out of every dollar you earn, and can look forward to seeing your efforts magnified in the long term.
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