How to Break Bad Spending Habits

How to Break Bad Spending Habits

Just about everyone is guilty of a bad spending habit or two. Some common poor spending behaviors include impulse buying, failing to budget, emotional spending or even accruing ATM transactions fees. Are you wondering how to break your own bad spending habits? All it takes is a little bit of discipline and minor lifestyle changes. The money you’ll save will definitely justify the effort.

Take Small Sums of Cash When You Go Out

If you have lots of cash on you, chances are you’ll feel tempted to spend it. One of the simplest things you can do when aiming to break bad spending habits is to simply leave your money at home. If you’ve planned a shopping session, plan your purchases in advance and only bring along the sum that you can afford to spend. It can be $20 or $200, but what matters is making the decision and sticking to it.

Some people still can’t resist the temptation and they’ll be prone to impulsive purchases. In this case, we recommend taking it a step further and  leave the credit and debit cards at home too!

Track Expenditure

Most people have no idea how much money they’re spending on things they don’t need. It’s a good idea to keep track of expenditure for at least a month; spending records will provide a lot of information of the areas where you can easily cut back. A simple Excel spreadsheet or a notebook can be used. Document all the money that you’ve spent and the things you’ve spent it on – paying loans, utility bills, food purchases, commuting, entertainment, medicines, etc.

Once you record your spending habits for a month, you can set realistic expectations about your fixed expenses (like phone bills or rent) as well as identify the variable expenses that you can cut back on. Capping your spending on entertainment, for example, could lead to profound changes in available cash at the end of the month.

Aim for a Goal

Visualizing a goal each time you feel tempted to spend money can be one of the most effective strategies for breaking bad spending habits. Your financial goal could be paying off your loan, buying a new car or going on a vacation. It doesn’t really matter what you prioritize – just choose something that you’re passionate about and will stay motivated to work towards.

Remember to take small steps first. Attempting to accomplish too much in a single month will simply discourage you from making long-term changes. Pat yourself on the back for each accomplishment and you’ll soon get where you want to be.