How to break the spending habit
How can I break the spending habit?
Plan your spending
Understand what makes you spend
Only take out money you need
Think it through before buying
Setting saving goals
Get financial advice.
Overspending is a hard habit to kick, especially when a purchase is tempting – either because it’s on sale, on offer, or it fits our current desires or mood.
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We all have our reasons for making an unnecessary purchase; do any of these sound familiar?
- “But I’ve been working hard so I deserve it.”
- “But I need a new outfit for that party/wedding/birthday.”
- “But I’ll play better if I have the same boots as Messi.”
So what’s the best way to break bad spending habits, knock the excuses on the head and get a handle on your finances? Our team at We Buy Any House have some tips that can help.
Planning your spending
Whether you’re guilty of buying the occasional pricey impulsive purchase, or you end up going way over budget on meals out each month, putting together a spending planner is a good way to ensure that you don’t overspend. Having your incomings and outgoings in writing can also help you plan ahead and make your financial goals more achievable. A spending plan should:
- Identify your income – including money earned from wages, benefits, job bonuses and tax refunds.
- List your expenses – monthly outgoings like electricity, gas and water, phone bills, food, car expenses or childcare.
- Compare your income and expenses – subtract your total monthly expenses from your total monthly income. This shows you how much you might be able to save or fall back on in an emergency.
- Set priorities and make changes – you can list what you need to cut back on to save money – buying cigarettes, alcohol or clothes.
MoneySavingExpert.com offers useful advice about how to manage your finances and set up a spending planner on its Budget Planner web page.
Understand what makes you spend
Knowing what causes you to splash out and when you do it most can help you reduce your spending. Perhaps you were feeling low or frustrated after a stressful week at work and in need of some retail therapy? When you’re about to buy something, it’s a good idea to first ask yourself, do I really need this, or am just trying to make myself feel better? Consider keeping a record of your spending triggers, so you become more aware of when you spend. It’s a good idea to maybe try to replace that spending with something else like a country walk or perhaps start a hobby; something relatively inexpensive and relaxing.
Only take out the money you need
When you go shopping, or for a night out with friends, try leaving your credit or bank cards at home. Set yourself a budget and just take the money you need. If you’re shopping for holiday clothes and don’t want to spend more than £200, just take £200 with you. This sets a limit and helps you to work with the cash you have to hand, helping you spend more wisely.
Before committing to a purchase
You’re in your local supermarket, you’ve filled your trolley and you’re ready to head to the tills. Before you go to the checkout it’s a good idea to go through each item you’re about to buy. Consider asking yourself do I really this or do I just want it? Perhaps you’ve made a few impulse purchases during your shop – the two-for-one milk offer won’t be a saving because you’ll just end up throwing one carton away. If so, put those unnecessary items back. This can help you save and keep you within budget.
Setting savings goals
Planning your spending can also help you save up for that something special – a new car, or to pay for a family holiday, perhaps. Maybe you’re saving up for a dream holiday to the US. When putting together your spending planner, consider including a set amount of money that you can put towards it each month. It’s also worth opening up a savings account, such as an ISA, which you can use to hold your savings. Keep a photo of your US destination somewhere like your office or on the bedside table at home. It will continuously remind you of the holiday and help work as an incentive to keep saving for it. The feeling you’ll have when you have saved enough money to achieve your goal can be priceless.
Getting financial advice
Setting up a planner, being strict with your money and purchases and giving yourself goals can help you stay within your spending limits and keep on top of your finances. More importantly, it can help stop you going into debt. If you’re concerned about your finances and worried about debt, there are people that can help. To find out more read our blog post, If you're a homebuyer struggling with debt, these organisations will help.
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