When you take control of your spending, the rest of your finances will fall into place.
But it all starts with the very difficult task of developing the discipline to control your spending habits. So, I’ve created 5 tips to control your spending.
TIP 1: SET UP A BUDGET
This is probably the most obvious, but essential nonetheless. When creating a budget, be sure to allocate every penny that you make to a purpose, whether it be saving or spending. You should know exactly where all of your money is going before you even get your paycheck. There are a ton of different tools out there to help keep track of your money too. I use an excel sheet but you can also use an app like Mint.
TIP 2: ANTICIPATE BUDGET FLUCTUATION
There are certain times of the year that you just won’t be able to stick to your budget and it’s important to account for that ahead of time. For most people, December is a big spending month with having to buy gifts, decorations, supplies for holiday parties, etc. Your holiday season will be a lot more stress-free and enjoyable if you budget for these expenses ahead of time. Read my blog post A Guide to Holiday Money Management to learn step by step how to financially plan for the holidays. Also, take some time to think about other times of the year that require extra spending. For me, it’s May and June where I just happen to have a lot of birthdays in my circle along with Mother’s day and Father’s day.
TIP 3: PAY YOUR CREDIT CARD BILL EVERY 2 WEEKS INSTEAD OF MONTHLY
Have you ever gotten to the end of the month, looked and your credit card bill and thought “what happened?” If so, you know it can be an overwhelming and stressful feeling. By paying your credit card bill off every 2 weeks, you avoid these surprises. It will also keep you from unnecessary spending because you can no longer deal with the actual payment at a far away date. You know you’ll be accountable for it fairly soon. If you try this and you’re still feeling surprised when you get your bill, lower the time frame to just 1 week.
TIP 4: IDENTIFY UNDERLYING ISSUES FOR YOUR SPENDING
When you make an unplanned spend, think back to how you were feeling. Was the purchase necessary (i.e- your car broke down and you needed a tow truck) or was it unnecessary (i.e- you just HAD to eat out for the 4th time this week). Note it down in a journal, excel file, notes on your phone, whatever. After a month, look back at your notes and see what trends arise. Do you spend money every time you have a bad day? If so, you need to adjust how you deal with negative things happening in your life. Making a purchase or utilizing “retail therapy” is a short term fix that, in the end, does more harm than good.
TIP 5: SET GOALS.
When you have a goal in mind of something you really want that you’re saving up for like a vacation or new car it’ll be easier to avoid spending now for the sake of achieving that goal later. You can even keep a picture of your goal in your wallet to remind you every time you spend money. This will make you more conscious and aware of your spending. Be sure to set realistic goals and calculate exactly how much money you will need and how long it will take to save up for it. This will make the goal real and tangible rather than a far away wish.