Spending money can be easy. Saving it can be difficult. That’s why it is important to find that balance when it comes to your finances.
In this guide, we’ll talk about how to understand spending habits and whether or not you are spending it on the things that don’t matter. We’ll also talk about how you can find that balance so you can be able to spend wisely and say no to things you don’t need.
When it comes to our personal finances, we need to remind ourselves of the priorities. Rent (or mortgage) and other monthly payments should take center stage. Sure, there may be a time to treat yourself.
However, you’ll want to make sure they are few and far between instead of all the time. With that said, let’s take a look now at what you need to do to rein in your spending habits. Your future self will thank you after reading this further.
What are examples of spending habits?
Here are some spending habits that happen on a regular basis:
- You earn money the day you get paid. So you treat yourself or your family to something like dinner.
- You may donate a certain amount to a charity every year or to a place like an alcohol treatment center.
- You purchase something at the last minute.
- Spending money on souvenirs while on vacation.
Some of these may be controlled and others may be a bit out of control. To that end, you’ll want to determine how much is enough. It’s true that with money in our hands, it may be easier to spend rather than put away.
That’s understandable. Plus, it’s hard to pinpoint why many people do this all the time. However, you can do the opposite of what everyone else is doing.
How do these habits form?
Spending habits can be formed depending on the conditions we put ourselves in. We could be observing them from other people and arrive at a conclusion that this may be OK to do because our parents do it.
It may not even be our parents that do this. It can be society as a whole. They can unconsciously spread the message that with money in your hand, you can spend it on anything you want at any time.
There are external factors that have the ability to access our minds and program them to tell us that it may be OK to spend, spend, spend. However, it can do more harm than good in so many ways. That’s why it is a smart idea to question what they are saying.
Most people will fall into this trap and spend money on things that don’t matter (even at the present time). As a result, they’ll fall into a financial hole that will be difficult to get out of. But you can get out of it if you have a plan in place.
What steps do you need to take to break bad spending habits
Below is a plan on how you can change your spending habits for the better. It is important that you follow this list since it will make the difference between spending money recklessly and saving it. Let’s take a look at the following:
Always track your spending
Keeping track of your spending will be necessary. You’ll want to know what you’re spending on and how often. Keep the receipts always.
Also, add up how much you are spending per month. Categorize your spending based on certain expenses such as food, housing, miscellaneous expenses, and so on. You can keep track of it all on a spreadsheet so you can keep track of the monthly and annual expenses.
Come tax time, this may or may not come in handy. Plus, you can also decide what to say ‘no’ to later on.
Be aware of emotional spending
Most of the time, we spend money based on our emotional decisions. Our logical decisions are often left to be forgotten. It’s important to be aware of whether or not our spending decision is an emotional one or not.
In other words, think before you spend. Ask yourself ‘do I really need this right now’. If you arrive at the conclusion that you don’t need it, say no and get it another time when it’s right to do so.
Create a budget and follow it
A budget is the best solution that will help you reign in your spending. Decide how much money you will be spending each month on food, housing, miscellaneous items, and so on. It’s important that you follow this budget to a tee.
Also, decide where you need to increase and decrease expenses. Only do this if you are earning more money. Sometimes, cuts can be made somewhere for whatever reason.
Make sure that your miscellaneous spending (such as non-essentials) are reduced. Because that might get you mentally prepared to spend less on things you don’t need for the moment. This may be a challenge when you start out with it.
But once you say ‘no’ to the needless spending and yes to the essential spending, it will become second nature. As for how long a habit can form, the jury is out based on the timing. Just keep doing what you need to do and don’t count the days.
Your challenge now is checking on the current status of your spending habits. If you feel like you are spending a bit too much, consider sitting down and following the steps listed above. It’s important that you put together a budget, learn how to say no to needless spending, and distinguish what’s essential from non-essential.
When you change your spending habits to something that will save you money, you’ll be way ahead of others. You will be saving money and being able to enjoy better financial health. Meanwhile, others around you may continue to keep up with the Joneses’ and dig themselves even deeper into financial despair.