In the United States alone, almost $200 billion is spent every year by convincing consumers to spend more. On top of that, technology is constantly creating new ways to make spending money easier. But just because it’s easy to spend money, it doesn’t mean you have to. There are ways to curb overspending, and it doesn’t require Herculean willpower or a degree in finance—it’s as simple as changing your habits. If you’re struggling with your finances, these six tips to help you control your spending can assist you.
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Track Your Spending
You can’t control your spending if you don’t know what you’re spending. Tracking spending may come easier to some than others, but with the number of tools now available, there’s no excuse not to do it. You should always know where your money goes, but if this isn’t something you have much experience with, you’ll need to spend one to two months tracking where every dollar has been spent. Every. Single. Dollar. Only once you track your spending can you become aware of the patterns and habits that you need to change.
Understand Why You’re Overspending
Once you’ve tracked your spending for a while, you’ll know where your money goes, but now you need to understand why it goes where it does. Contrary to popular belief, those who are better at managing their spending don’t have better self-control, they just have better habits. That’s why you need to figure out what your habits are. This is often one of the most difficult parts of controlling spending, because it requires you to be honest with yourself. Maybe you look over your spending and realize that any time you had a stressful day, you would go shopping. Or maybe you always planned to cook weeknight dinner, but when you got home from a long day of work, you were too tired and often ended up ordering delivery.
Change Your Habits
If you know why you overspend, you have the information you need to change your habits. You can’t eliminate stressful events or long, exhausting workdays—but you don’t have to. All you need to do is create a plan that sets you up for success. If you shop when stressed, you could find a new way to manage your stress such as calling a friend, going for a run, meditating, etc. If you plan to cook but often end up ordering carryout, you could start meal prepping on the weekends or cook slow cooker meals, which allow you to throw all the ingredients in before you leave and come home to a delicious, ready-to-eat dinner.
This is the most misunderstood part of managing spending, and it’s also why so many people struggle. Controlling your spending isn’t about deprivation—it’s about prioritization. Which of the items that you spend money on brings you genuine joy? Coffee is the go-to example of a small purchase that you can save you a lot by eliminating. But maybe, for you, a daily coffee is a priority. Maybe it’s not even about the coffee for you. Maybe it’s about the five minutes of calm between the chaos of home and the office. If you can afford to, there’s no reason you must eliminate this expense, but you then have to make a cut somewhere else. Find an area that doesn’t bring you as much joy—maybe for you, it’s buying new clothes. Then, you have to limit this expense in exchange for keeping the expense that brings you more joy, which in this case is coffee.
Create a Budget
Now that you know what your priorities are, you can create a budget that’s built around them. Since your priorities are unique, your budget will be too. There is no one-size-fits-all way to make a budget. It’s possible that your first attempt is perfect, but more likely than not, it’ll require some tweaking. Maybe you think you want to have every category broken down into many different subcategories, but realize broader categories with a bit more flexibility work better for you. You also may need to play around with the amount in each category to find a balance that works for you.
Give Yourself Some Flexibility
A super restrictive budget is a lot like a super restrictive diet—if you’re miserable, you’re highly unlikely to stick with it. This isn’t a free pass to go on a spending spree, but in the long run, you’re far more likely to stick with your budget if you don’t feel horribly deprived. And when you do slip up, don’t use it as an excuse to throw in the towel. Changing your habits takes time and some trial and error. It’s not going to happen overnight. So, when you do slip up, which you inevitably will from time to time, use it as a learning experience. If you went out with friends and overspent on food and drinks, maybe next time you leave the credit card at home and only bring cash. Keep experimenting until you find what works for you.
Seek Assistance Creating a Budget
We hope these six tips to help you control your spending assist you. Also know that no matter what you’ve tried before, it really is possible to control your spending. By incorporating these tips, you can replace your bad habits with some more helpful ones. But, if you’re still struggling to control your spending, consider working with an experienced financial advisor from Modern Family Asset Management for more personalized guidance.