The Mental Habit That May Be Keeping You Poor | Money | TIME

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How to Break Bad Spending Habits

Three Methods:

If you need to cut back on spending, you aren’t alone. In the United States, half of all families are living paycheck to paycheck, which can make saving difficult.Bad spending habits often creep up on you, and before you know it you’re deep in debt and probably stressed. To break your habits, you need to identify when and where you spend and come up with a budget. If necessary, try a “financial fast” to break an addiction to credit cards.


Developing Good Spending Habits

  1. Create a budget.Stop ignoring your bills and commit to seeing how much you spend each month.Sit down and calculate the following:
    • Your monthly income. Add up everything: salary, wages, tips, unemployment benefits, etc.
    • Your fixed expenses. These are things that cost about the same every month, such as your rent/mortgage, health insurance premiums, car payment, etc.
    • Your discretionary spending. This spending varies depending on the month. Most of your bad spending habits will be for discretionary items.
  2. Reduce the amount you spend on clothing.You can certainly look good without stopping into a store every week to buy something new. Go through your closet and find clothes in good repair. Then organize a clothes swap with your friends.
    • If you need to buy something new, shop at thrift and consignment stores to save money.
    • For new purchases, focus on small accessories that can bring your outfits together.
  3. Stop eating out.Everyone needs to eat, so you can’t reduce food expenses entirely. However, you can save by cooking more at home instead of eating out at restaurants. Save extra money by buying generic label products and clipping coupons.
    • Learn to cook at home by buying a cookbook. There are also recipes for many 15-minute meals online that you can easily find.
    • If you want to entertain, then throw a potluck and ask every guest to bring one small dish.
  4. Cut entertainment expenses.There are many free options for entertainment. All you need to do is look around. Consider the following cheap substitutes:
    • Rent DVDs from the library instead of going to the movies.
    • Check books out of the library instead of buying them at a bookstore.
    • Play board games with your family or friends.
    • Listen to music for free over the radio instead of buying CDs or downloading songs.
  5. Put the phone away.Many people who shop online do so when they are waiting in line at a business.To save money, turn your phone off when you go shopping or leave it in the car.
  6. Wait before you buy.One bad habit is the impulse buy. You see something you must have, and you immediately charge it to your credit card without thinking. Break this habit by practicing patience. Wait at least 24 hours before you buy something.
    • Often, you are buying because you are emotionally unhappy at that moment. After a good night’s sleep, you will be in a better mood and probably not want the item in the morning.
    • If you still buy, then extend the waiting period—48 hours, 72 hours, etc.
    • Another alternative is to give yourself a cash allowance weekly or monthly and don't charge at all.

Taking a Financial Fast

  1. Put away your credit cards.During the fast, you use only cash. Hide your credit and debit cards or freeze them in ice so you can’t access them easily. Instead, take out cash from your check or savings account to spend.
    • By paying with cash, you’ll become more aware of what you are spending.You might not really know how much you spend on a morning coffee or a magazine during your lunch break, especially if you pay with credit.
    • When you get come, put your coins in a jar. You might need that change before the fast is over.
  2. Identify your necessities.During the fast, you will commit to buying only necessities with cash. Generally, necessities will include your food, housing, medication, and transportation.
    • However, there’s no bright line. For example, getting a new hair cut might be a luxury to one person but a necessity for someone who must look professional for their job.
    • The key is to define necessities before you start fasting, and not in the middle of the fast when you are about to make an emotional purchase.
  3. Log your purchases in a journal.Keep a detailed journal about what you buy. Include other helpful information, such as your desire to spend on that day. Where were you? What did you want to buy? What time was it. Keeping the journal will help you identify financial “triggers.”
  4. Tell people you know about the fast.You’re more likely to stick to your financial fast if other people hold you accountable. Tell your family and friends when your fast begins. With luck, they’ll understand why you didn't buy a birthday gift or go out for happy hour.
  5. Fast for three weeks.At a minimum, you need to follow your fast for at least 21 days. At the end of three weeks, you should feel a reduction in temptation to spend. You’ll also have saved a little money, which you can also use to pay down your debts or save for retirement.
  6. Assess the results.Go back over your journal and check what you bought with cash. Compare your purchases to what you made before the fast. Did you spend a lot less? What were the triggers that tempted you to spend?
    • Going forward, you can eliminate triggers. For example, you might be tempted to buy clothes after a stressful day at work. Change your commute so you don’t pass your favorite clothing stores.
    • Also identify when you spend. Everyone needs their little rituals to get through the day, and you don't need to cut them out altogether. Instead, you can find cheaper substitutes.For example, instead of getting a drink with a colleague, go for a brisk walk with a coworker and talk about your day.

Saving Money

  1. Pay your bills on time.Late fees and interest can add up, reducing your income substantially. Get in the habit of paying your bills before they are due. If necessary, set up text or email reminders for those expenses you pay online, such as credit card bills and utilities.
    • Automating as much bill payment as possible is ideal. You’ll never see the money, and never be tempted to spend it before you pay your bills.
  2. Open a checking account.You might be losing quite a bit of money when you cash your check, especially if you cash at a payday lender. Many places charge up to 10% of the amount of the check.
    • Instead of using payday lenders, you should open a checking account. Visit a local bank or credit union.
    • If you can’t get a checking account, try to cash your check at the bank that issued the check.
  3. Avoid touching your retirement account.When you’re short on money, do you take funds out of your retirement savings? Many people do, and you need to break this bad habit.Your retirement savings are for retirement, not current expenses.
    • Break this habit by building an emergency savings fund. Try to save up to six months of expenses. Once you meet that goal, save up for 12 months of expenses. You can tap your emergency fund when your car breaks down or you lose your job.
    • Start small, by putting aside whatever you can afford, such as a pay period. After a couple months, try to increase your contribution to a pay period. Use direct deposit so you never touch the money.
  4. Remember wealth doesn’t bring happiness.Being poor reduces well-being, but once you take care of necessities like food and shelter, money no longer increases happiness.
    • Popular culture is full of images of happy, wealthy people. You rarely see a working-class or even middle-class person anymore. Turn off the TV and cancel your magazine subscriptions so that you aren’t seduced into equating wealth with happiness.
  5. Work a part-time job.After you break your bad spending habits, commit to saving more money. Wake up earlier in the morning and use the free time to earn money by writing blogs or walking your neighbor’s dog around the block.

Video: How I Changed My Spending Habits | Saving Money with Minimalism

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Date: 05.12.2018, 13:11 / Views: 51344