If you adopt these simple money habits, you’ll spend your money more wisely and be rewarded with an increased bank balance. And the good news is, you don’t need to feel deprived or give up the things you love. All you need to do is use a little psychology.
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So, it looks like we’re all going to need to tighten our belts for the foreseeable future. I feel like I, personally, have been overdue for a bit of a course correction. I’ve been decluttering like mad throughout 2020 in preparation for moving into our new place and I’ve had way too many moments where I’ve asked myself questions like, “Why do I own three almost identical pairs of khaki shorts?” and “Does anyone need this many candles?”
By the end of 2021, I expect that I will have moved from a home to an apartment to another apartment and into (what I really hope and pray will be) the home we live in for many, many years and so I can tell you that your attachment to stuff changes a lot when you have to move it repeatedly. I’ve been implementing several changes in my habits toward money and how I spend over the past year and I’ve been motivated to continue because I’ve seen the results in my bank account. I’ve been able to pay down debt and grow my savings and I’ve discovered having that savings to withstand the surprises life can throw at you is much more comforting than any candle or throw blanket I can get at Home Goods.
Don’t get me wrong, I love my blankets and candles. I’m just realizing now the power of spending money thoughtfully and wisely so that you buy only the items that really bring you pleasure. And in order to do, I’ve developed some money habits to make sure I’m spending my money wisely on the things I really want and need and not wasting it on things that won’t serve me in the future.
Here are 10 money habits you can use to help you spend more wisely.
Develop the Money Habit of Controlling Impulse Spending by Delaying Your Purchase
It’s so easy to buy something from Amazon, isn’t it? Find what you want, click Buy It Now, and it’s on the way. Unfortunately, that also makes it too easy to buy things you don’t really need. And it’s the same with physical stores: if you’re already there, it’s super-easy to throw “one more thing” into the cart.
Try these tips to significantly cut down on impulse spending:
- Delete all your stored payment information from Amazon and your other favorite online shopping sites. Adding a layer of inconvenience gives you a bit of extra time to reconsider whether you really need this item or not. If you’re not ready to do that, then place items in your cart and come back a day or so later to actually purchase the item. I can’t tell you the number of times this has given me enough time to realize I don’t need yet another cookbook.
- Unsubscribe from store email lists. If you don’t know about the sale, you aren’t tempted to buy something you really don’t need.
- When you’re out shopping and you see something you’d like to have, take a picture of it with your phone. If you still want it in a week, go back and buy it, but most of the time you won’t want to.
Track Your Spending to Identify Areas Where You Could Cut Back
It’s pretty sobering to realize that the $10 lunch you get every day at work is actually costing you $200 a month or that you spent $60 on books you haven’t even read yet. I frequently go through my transactions and look specifically for the following items:
- Purchases that didn’t “spark joy” like that fancy weekend trip that ultimately wasn’t worth the money we spent.
- Recurring subscriptions I’ve forgotten about.
- Stuff I’m spending too much on. (I spent how much on shoes?)
- Things I’m buying too often. (I’m eating out how many times? How many times a week am I running to the grocery store?)
It can be fun to set a challenge to see how much you can reduce an expense the following month. Maybe you can cut the amount you spend on dinners out by 20% or resolve to not buy any books, but instead, read the ones you’ve bought already.
Start Meal Planning
There’s a beginner form of meal-planning and a more advanced form, but you can save money no matter what form you choose.
If you’re a beginner at meal planning, you’ll be amazed at how much money you can save by simply starting to plan your meals at the beginning of each week. You save money at the grocery store by buying only the ingredients you need for the meals you’ve planned. You also avoid impulse grocery shopping and dinners out because you’re no longer getting home and realizing you don’t have anything to eat in the house.
Once you’ve gotten used to meal planning, try moving to advanced meal planning by looking over the grocery store flyers to see what’s on sale each weekend before you plan your meals for the week. If you create menus for the week that take advantage of those sales, you can save significant amounts of money on groceries by taking advantage of those sales.
Have a “No Spend” Day Once a Week
Plan to make one day each week a day where you spend absolutely nothing. This helps you get in the habit of spending less overall.
If you’re really brave, you can try a “no spend” month for groceries and eating out where you eat only at home using the food you’ve already got in your pantry and freezer. You can use your advanced meal planning skills here to plan meals using the ingredients you already own.
Actually Return Items that Didn’t Work Out
It’s so fun to buy things, but not fun at all to take them back when they didn’t work out. I used to be the worst about keeping that tablecloth that turned out to be too small or the foundation that wasn’t the right shade. (Did you know that most places let you return makeup that doesn’t work for you? It’s true!)
Now, I immediately put anything that isn’t working for me back in the bag with the receipt by my door and I return it the following weekend when I’m running errands. I feel virtuous, I’m no longer being wasteful, and the money is back in my pocket.
Don’t Buy Something Just Because It’s on Sale
This is my shopping Achilles heel. A 12-piece cookware set that’s 50% off? Tell me more, right now, please! (An actual example from right now. I’m serious.) I’m in the market for new cookware so I was doubly-tempted but here’s how I resisted that temptation.
- Reminding myself that by not buying the cookware right now, I was saving 100% of the purchase price.
- Telling myself that an informed purchase decision is always more cost-effective than an impulse buy. (I haven’t yet researched cookware sets; I’m not quite sure what I really want to buy yet.)
- Reassuring myself that when I was ready to buy that good deals would still be around. That, in fact, it would be quite possible that this particular cookware set would still be on sale.
It’s so easy to be tricked by the urgency of limited-time-only sale. That’s what the marketers are hoping will happen. But if you wait before you buy you’ll save money by not buying something you don’t need simply because it’s on sale. And if you are in the market for the item in question, waiting until you make an informed purchase will save you money ever time because you’ll be happier with your purchase once you finally pull the trigger.
Make it Easy to Put Money in your Savings Account and Hard to Withdraw It
Most employers will let you automatically deposit your paycheck into more than one account. Send a fixed amount to your savings account each payday and you’ll never even miss the money because you didn’t see it.
Keep your savings account at a different bank from your checking account so you aren’t tempted to spend your savings every time you check your checking account balance. If you can, pick a place to keep your savings that makes it a little tough to make withdrawals. For example, an online account that takes a few days to transfer the money to your checking account.
If you get a debit card with your savings account, leave it at home so you have to go get it if you need to access your savings. This protects your savings account from its greatest danger: you.
Use Cash for Eating Out and Other “Fun” Expenses
Create a budget for eating out, going to movies, etc. and withdraw that much cash at the beginning of each month. Use the cash to pay for your fun and when it’s gone, it’s gone.
Studies have shown that we tend to spend more when we use our credit card for purchases. By using cash for these expenses, we can easily see how much we have left and determine whether we really want to hit that happy hour with our friends.
Visualize Your Goals … Literally
You know I love my vision boards. If you’re saving up for something special, like a vacation or a big-ticket item, keep yourself motivated by creating a digital vision board that you can carry with as your phone wallpaper. That way, when you’re tempted to spend money, you’ll be reminded of what’s really important to you and you can decide if you really want to make that purchase.
Think of How Much “Life Energy” You’re Trading for What You’re Buying
I got this idea from a book that really changed how I thought about money, Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence by Vicki Robin and Joe Dominguez. It’s an older book, but full of great wisdom about how to think about your relationship with money.
This is where I first heard about the concept of how money equals life energy. You traded your life energy – your time and your effort – for the money you have. If your hourly rate is $20/hour and you’re looking at a $60 blouse, you’re trading 3 hours of your life energy for that blouse. So, ask yourself, if this blouse worth 3 hours of your life energy? All too often, I’m betting the answer is “No,” but if you decide the answer is “Yes,” then you know this blouse is absolutely something that’s going to bring you a lot of joy.
What are some changes to your money mindset that helped you save money? Let me know in the comments?