Sticking to a spending plan can be challenging, but it’s an important part of staying on top of your finances and achieving your ‘big picture’ financial goals. Here are a few tips for getting into good spending habits – and breaking up with the bad ones.
When it comes to your finances, it’s important to face the facts. So never ignore bills or leave credit card statements unopened. Being honest with yourself about how you are spending money is the first step towards tackling overspending, clearing any debts and saving for the future.
A monthly budget is an essential tool, but it has to include all your current expenses. To help you work out your spending priorities, mark up your ‘must-have’ expenses in one colour – like rent, bills, groceries, and school expenses. And your ‘nice-to-have’ expenses in another – like eating out, new clothes or nail treatments. This will make it easier to see where your money goes, and how you can cut back if you’re overspending.
If you do need to make some savings, it may be simpler than you think. Even small purchases quickly add up if you’re forking out for them on a regular basis. Coffee and cake may only cost $12, but if you do it 2-3 times a week, you could end up spending $100 a month. That money may be better spent paying off debts or topping up your super.
Do you really need that new outfit? Or is it one of those that looks better in the shop than in the wardrobe? One of the best ways to find out is to give yourself a 48-hour cooling off period before buying anything new. If it’s still calling you after that time, the chances are it’s something you need – or really want. So go ahead and buy.
If your spending is getting out of control, it may be time for a spending freeze. So look at what you are buying and cut out one category completely for a set period – say 1 or 3 months. Perhaps it’s a ban on takeaways, alcohol or new outfits. Either way, you’ll be amazed at the difference you can make – as long as you stay strong and disciplined against your spending habits.
If you have multiple debts owing on credit cards, store cards or personal loans, tackling these should be a priority. One of the best ways is to consolidate them into one loan with a single, manageable repayment. Not only can it be a huge relief not to have lots of different debts to deal with, it can also be the first step towards getting your finances back on track.