If you are reading this article, then you have already decided that you need to change your spending habits to improve your day to day life. There are many good reasons to come to this decision, and even if your spending isn't out of control, everyone can benefit from following some of the steps I outline below. I believe that everyone can improve in some way, I am no exception to this either, I used to buy items that were on sale, even though I didn't 'really' need them. There was a simple solution to this, which I used to help me change my spending habits. I hope that you incorporate at least one or two of the methods below into your everyday life, and can benefit from the extra money, and guilt free knowledge that you are on track to reducing your spending.
A good way to help yourself realize just how much money your spending habit is costing you, is to take 2 weeks (or even better, a month), and record every single penny you spend, and what/where you spent it on. Yes, this is a bit of a challenging task, but if you can get a complete and accurate list of everything you bought within the time frame, you have a good starting point in place so you can track and feel good about any improvements you are making over time. Now that you have a list, divide it up into two columns Expenses and Spending. All of your utilities, mortgage/rent, car payments, gas, and other living expenses go into the expenses list. This list is for everything that you HAVE to pay every month in order to survive. Everything that is left (including credit card interest payments), put into the spending column, and tally it up. How much did you spend? what is the percentage of spending over expenses ((Spending Total / Expense Total) * 100)? If this number is higher then you expected, then you know that you have some work to do. Put this percentage up on the wall or refrigerator, somewhere that you will see it every day, now on this same piece of paper write down the percent that you want to get to. You might be wondering what a 'good' number for this would be, and that really depends on where you are. If you know that you want to change your spending habits, then you know that you want to make that number lower, I try to keep my spending to between 10 and 20 percent of my expenses. This is your goal, and is something you want to strive to achieve. You'll want to do this same exercise every month or couple of months to track how much your spending habits have improved. It can be helpful to write down each score on the paper you posted on the wall or refrigerator, this will give you a visible daily track record to be proud off, or inspire you to do better.
Now lets talk about the habit that I used to help me from buying unneeded items that were on sale. Just because something is on sale, does not mean you need it. This is a really good one to focus on, because I feel that a lot of people suffer from the same impulse buying when they see something that catches their eye and is on sale. When you pick up an item that you didn't leave home knowing you'd buy, you have to stop for a second, and before you place it down into your shopping cart ask yourself "If this item were full price, would I still buy it?" Well, In most cases the answer to this is going to be a firm "No", you only picked it up BECAUSE it was on sale. Since you wouldn't pay full price for the item, ask yourself, how do I know that I ACTUALLY need it? If there is no direct need for this item in my life, why is it so important that I buy it now? It probably isn't important to buy now, and if you wouldn't pay full price, meaning, you have no functional/immediate need for the item, you should probably put it back on the shelf, and go home without any shoppers guilt and the knowledge that you saved yourself some hard earned money.
Another reason its good to go home and think about an impulse purchase before you actually make the purchase, is because it will give you time to think it over and decide if you actually need the item. While you are at home thinking if the item is necessary, take a few moments to do a search online, and see if you can get a better deal, most things you can buy in a store can be found online, and usually for a better price. Another thing you might want to try is shopping around, go to or call different stores that sell the same product and see what their prices are. By shopping around online and offline, you are forcing yourself to really consider if you actually need the item or not, and as an added bonus, if you come to the conclusion that you do need the item you might be saving yourself some extra money in the process.
You might be thinking that you don't have time to look online or travel to different stores, well, this is probably the case most of the time so there are other tools we can utilize to help change your spending habits. One method is to always carry cash with you and not to bring your credit or bank cards, or have them with you but make sure you don't use them. How this helps is quite simple, if you don't have enough cash on hand for it, then you can't afford it and in turn don't actually need it.
Another method you could employ is a rewards method, whenever you make it through a whole week or month without any unplanned purchases, you allow yourself to go out and make an unplanned purchase of whatever you want, as long as it stays under a predetermined amount. You could start with a 1 week time frame, and give yourself a $10 or $20 reward. Once you get the reward, increase the time to 2 weeks, but double the reward amount, so if you make it 2 weeks without any unplanned purchases you give yourself a $20 or $40 reward. If you hit this milestone, you double the time and money again, so your looking to go 4 weeks, for an $80 reward. Once you hit a time frame of one or two months, you might want to lock down the reward and time. so, every month you go, you get that $80. This keeps the time between rewards low, and gives you something to look forward to. If you don't make it to the end, no matter what you tell yourself, or how you try to convince yourself, DON'T give yourself that reward. You need to start from scratch again, go one week, with that $10 or $20 reward, and work your way up again. The reward amounts and time frame you want to use are completely up to you. Just remember, make it a game and have fun with it, and you're spending habits will change along with it.
The last way I want to talk about is something that might remind you of being a kid again. A weekly (or bi-weekly) allowance. My wife and I give ourselves a bi-weekly allowance of 10% of our pay cheque. (the rest goes towards expenses and retirement savings). Doing this allows us to buy whatever we want with 'our' money, but it makes sure that all of our expenses and savings are covered. As soon as our pays come in we move the money to the appropriate accounts and are left with our allowance which have free reign to do whatever we want with. Setting an allowance may not be fore everyone, but once we had our spending habits in place, it was the best method for us.
That is all for now, remember that changing your spending habits really can have a positive impact on your life, you'll have more money for the things you really need, like paying down debt, or saving for that trip down south (or wherever you want to go). As I like to say, the first step is the hardest one, so go ahead and get it over with, then you can continue on the path of personal growth and improve your life one step at a time.