It is not just enough to make money, we must learn to keep money and grow our money. One of the things that usually limits us from achieving these is usually our bad spending habits. It could be challenging to manage your spending, but it is achievable; all it takes is commitment and determination.
Here are 7 ways you can overcome your over spending habit as you step into the new year.
1. Track your spending
To gauge your spending level of caution, make sure to keep track of your expenditures daily, weekly, and monthly. This will help inform how you create your budget. This activity also assists you in improving your decisions over time by highlighting excessive costs associated with indulgences and assisting you in avoiding them in the future.
Find out what takes a big chunk of your money and every other seemingly little money you spend daily that when they are added up is quite much. You can either use some spending apps or just simply take notes on your phone and review them at the end of the month.
Maybe you spend a lot on the newest gadgets. Although, it is not necessarily terrible to have these things. You should have the freedom to spend your hard-earned money, on things that make you happy. However, it could be time to rethink if these habits are getting in the way of you reaching your objectives or saving money.
2. Keep a Budget
Budgeting is one of the best ways to curb your spending habits in the new year. Tracking your spending habits will help you form a proper budget. At first, you might struggle to stick to your budget, but if you are consistent and deliberate about it you can. However, if you can develop a budgeting strategy that works for you, it can change the way you manage your finances.
Most individuals find that cutting back on what they enjoy is not a long-term budgeting strategy. Do some study on strategies and stick to the one you are comfortable with. The budgeting strategy that you can use consistently is the greatest!
3. Identify your spending triggers and avoid them
Finding the emotional and psychological factors that trigger us to spend is frequently the key to learning how to quit spending excessively. You will eliminate the temptation and chance to overspend if you know them and deliberately stay clear of those triggers.
People, environments, times of day, circumstances, influencers, role models, moods, peer pressure, and lifestyles can all be triggers for excessive spending. If necessary, distance yourself from friends or coworkers that promote excessive spending. Limit the rate at which you do “we are outside”, especially if it is not necessary.
4. Set financial objectives for yourself
Regularly practise setting financial objectives for yourself. The objective to mind is finding new methods to grow your money rather than diminish it since the brain loves difficulties. It is beneficial to concentrate on worthwhile endeavours and avoid pointless expenditures.
It is simpler to maintain tight control over your spending when you have long-term goals in mind. Instead of spending a fortune on a trip, you may envision yourself retiring early and being content with a more affordable getaway.
5. Avoid impulse buying
To avoid impulsive buying you need to practice the “wait-before-you-buy” method. This gives you more time to think twice or thrice about your purchase in objection to buying it in real-time.
Making decisions based on what will move you ahead requires wisdom, and putting blinders on what other people think requires guts. I frequently have to ask myself, “Would I purchase this if nobody ever saw it? Can I afford to buy this twice?” If can’t confidently answer this, then I don’t buy it.
6. Save more by Automating your savings
Saving can never be overemphasized and one way to be consistent at this is by automating your savings. Your budget will greatly inform this because from your budget you will have an idea. There are various saving methods you can apply like the 80/20 technique, the envelope strategy, and the 50/30/20 method.
You also need to build emergency savings. The ideal way to create an emergency fund is to open a separate savings account1 that is only used for emergencies. Consider things like unexpected medical costs, auto repairs, job loss, etc. This prevents you from having to use payday loans, rapid credit, or other savings accounts to help you get by.
7. Equip yourself with financial literacy
Read books about finance, listen to podcasts on saving and investing, follow brands that teach financial literacy, subscribe to finance newsletters and read them, and have conversations with your friends on making money, managing money, and growing money. Just fill your mind and brain with the knowledge of finance.
Knowing better will surely help you do better and help you make better financial decisions. A finance newsletter you have subscribed to can stop you in your tracks of buying that expensive shoe you don’t need at the moment.
As you wrap up the year, don’t be afraid to set aside a few days to apply all of this.