Your spending habits can make or break your financial future. If you keep your spending in check, you can save, invest, and eventually become financially independent.
If you are reckless with your spending you could get caught in a debt trap and ruin your financial future.
So, how do you get rid of the habits that could put you in debt and lead to financial instability? Here are seven ways to end the debt lifestyle for good.
Track your spending
Not tracking your spending is a bad habit that can cost you dearly in the long run.
In fact, it is one of the ways many people sleepwalk their way into debt without even realizing it. Unless you know how much you spend and what you are spending it on you will never be able to make informed financial decisions.
Go through your credit card statements, bank statements, and credit report to get a clear idea of your spending habits. Make a note of each and every expense — rent or mortgage, groceries, utilities, transportation, meals, entertainment, debt repayments, insurance premiums, and so on.
Every penny you earn should be accounted for. It is the very basis of financial literacy and the first step you need to take if you want to be financially stable.
Identify your spending triggers
There are times when you buy something on an impulse rather than making a conscious decision to spend your money. You need to identify the triggers behind such purchases and avoid them completely.
For example, avoid shopping or eating out when you are stressed out. Studies show that people tend to spend more when they are stressed out as it gives them a sense of relief.
Whenever you are stressed out, go for a run, meditate, or pick up the phone and talk to someone you love rather than buying things that you do not need.
Similarly, avoid buying things due to social pressure. Studies show that airline passengers are likely to buy something if the person sitting next to them buys it, irrespective of whether or not they need it.
The same principle can be applied to social media as well. When you see a picture of your friend with his new phone, computer, or car, you might be tempted to have the same things.
Researchers say that people tend to display a distinct lack of self control after spending time on social media networks. Do not spend money on anything just because your Facebook friends did so.
Follow the ‘leave and come back’ rule
One of the most effective ways to curb unnecessary spending is to follow what is called the “leave and come back” rule.
The rule is quite simple. Whenever you want to buy something, go to the store, look at the item you want, put it back, and leave.
Come back to the store the next day and buy the item if you still think you need it. The 24-hour period gives you sufficient time to think about the purchase and decide if you really need it.
Buy things at the right time
Do not shop for clothes and accessories at the start of a new season, when the prices are likely to be at their highest. You can purchase the same items at a steep discount at the end of the season.
You can follow the same strategy for groceries as well. Make a list of all the foods and other grocery products with a long shelf life and buy them in bulk when they are on sale.
Always shop with a list
If you do not have a list with you when you go shopping, you might end up buying things on a whim. So, before you go shopping — be it at a brick-and-mortar store or an online store — make a list of all the things you need and stick to it.
Use cash, not cards
Leave your credit cards and debit cards at home when you go shopping. Pay for the things you buy with cash. It is one of the easiest ways to reduce unnecessary spending.
Research shows that you are likely to pay more for an item or spend money on something you do not actually need when you pay for it with credit card or debit card, rather than cash.
The reason is that you are unable to get a real sense of how much you spend or feel the pain of parting with your money when you use your credit card or debit card.
When you carry cash you cannot afford to buy things you do not need. Let’s say you plan to buy five items worth a total of $100.
If you have exactly $100 with you you are unlikely to pick up an extra item just because it happens to be on sale. With credit or debit cards, you have no such constraints as you can buy anything you want and simply swipe your card at the checkout.
Set financial goals
The best way to get rid of a bad habit is to replace it with a good habit. So set a number of short-term and long-term financial goals, write them down on a piece of paper, and stick it on your refrigerator, writing desk, or any other prominent place.
Whenever you have the urge to spend money on something you do not need you can control it by focusing on what you are trying to achieve. It is a poignant way to instill a sense of financial discipline and develop healthy spending habits.
Avoiding unnecessary spending does not mean that you should not reward yourself from time to time. In fact, if you are too strict with your budget, you might feel frustrated and deprived after a while, at which point you might start overspending again.
So, allocate a small portion of your budget for fun, a movie night or an activity such as miniature golfing or rock climbing in a gym, and reward yourself every time you achieve a short-term financial goal.
Small rewards help you to stay motivated and work towards achieving your long-term financial goals.
Bulletproof Your Portfolio Now!A smart investor should be prepared for anything. That’s why David Frazier created the Bulletproof Wealth Report. This comprehensive investment service is everything you will need to survive and thrive in the looming meltdown. In other words: It’s how anyone can make their portfolio bulletproof. It’s a mix of fast-growing, leading companies that are the engine of American prosperity. To that he adds a healthy dose of “insurance policies” i.e. stocks and funds that benefit when the next recession strikes. The future favors the prepared. You can be prepared. Not only that — you can profit.
Bulletproof My Portfolio!
Cryptocurrency Will Shine Through the Coming ChaosWhile the U.S. spends and spends and spends its way into oblivion, the eventual result will be inflation. Serious inflation. The dollar will crash, gold will shoot higher and Bitcoin, well, it can only become more scarce and more valuable. There’s a natural ceiling to the number of Bitcoins that will exist — ever. By design, there can only be 21 million of them. Soon, the ceiling will be hit. Now is the moment to get into cryptocurrency. There’s a been a rise of late, but prices are consolidating, setting up for the next leap higher. Grab Keene Little's widely followed cryptocurrency newsletter, Crypto Wealth Protocol completely risk free.
Yes! Send Me A Free Issue