Saving money is not always as easy as we think. It is easy to get distracted by a sale sign in a shop window or go out for a meal with your friends on a Friday night. However, many of us fall victim to bad spending habits and as a result it can put us in a difficult financial situation.
In this article we will be discussing how you can overcome your bad spending habits to help you end the year with a happier and healthier bank account.
Track Your Spending
It can be so easy to fall into the trap of making small purchases. Although a slice of cake from your local café might not cost a lot if you are doing this often that little spend can add up. It is essential that you track your spending to help you identify these small spends before they become a huge problem. An expense notebook, like these ones can be a great way for you to track your spending and if you get one small enough you will be able to carry it around with you in your bag – just don’t forget a pen!
When it comes to tracking your spending, it takes effort and organization. However, by doing this you will be surprised at how much you can spot bad spending habits before they become a big issue and a financial challenge.
Use Cash Instead of Card
Most of the time our bank cards can be our worst enemy. With contactless it has become easier than ever to pay for everything on your card without even thinking about it. If you are someone who is spend happy with their card, then now is the time to put it away and instead use cash. It is advised that you withdraw money so you are aware of how much money you can spend without it becoming a financial issue.
Cash is great because it is physical, and you can see it unlike a card. By using it more often you will become less reliant on your bank card in the future and before you know it, you’ll be saving a lot more money each month.
Understand Your Debt-to-Income Ratio
One thing that can put you off bad spending habits is the knowledge of your debt-to-income ratio (DTI) Your DTI is a measure of how much you spend on your debts a month. This can be anything from your rent to credit card bills. Gaining an understand of your DTI can help you budget for the month.
Our bad spending habits can lead us into trouble when it comes to paying off debts but if you are aware of how much you need for this each month then you will think twice before picking up that new dress you saw in the shop. For more information on DTI, you can read this guide which offers helpful advice on how you can lower your debt-to-income ratio.
Set Yourself Realistic Financial Goals
An effective way to overcome bad spending habits is to set yourself realistic financial goals. As we reach goals it helps us to feel more accomplished in life and this is no different when it comes to your finances. You can set yourself the goal of cutting back on clothes shopping or limit yourself to one meal out a month instead of the usual four.
You can even use these personal goal setting templates and use them to write down your goals so you can look back at them to help motivate yourself. You can even set yourself goals regarding savings. Set yourself the challenge to put away 5% of your paycheck each month. It is important to set goals that are realistic. Setting goals that are too challenging can lead you to feeling unmotivated and disheartened if you can’t meet them. These emotional triggers can cause you to go out and spend so we want to do the best we can to avoid that.
Identify Your Spending Triggers
You may be surprised to know that emotional triggers can cause you to spend money. If you go out and splurge the cash, then try to remember what mood you were in that day. Was the environment that you were in making you want to spend? Or do you succumb to peer pressure and spend money when you are around your friends? Whatever the reason, it is important that you try to identify it to avoid it in the future.
If you are struggling to pinpoint where your spending habits stem from then take a look at these 6 common spending triggers to watch out for. You may feel like you can never overcome these triggers but by avoiding certain situations you will be well on your way to curbing your bad spending habits.