If you’ve set financial goals, you need to start putting away money along the way. This also means you’ll have to spend less and save more. Of course, this is easier said than done.
You start out with great intentions to save money but constantly find that bank account balance dipping lower than expected. Don’t beat yourself up, it’s common. Here are some tips you can use to help yourself break out of the overspending cycle:
Identify your spending triggers
There are a lot of triggers and factors that cause you to spend and affect overspending such as your mood, friend circle, the environment, etc. Look into and understand each trigger carefully, focus on removing these triggers and you’ll get rid of the temptation to overspend. Identify what affects your spending behaviour and find ways to avoid shopping.
Track your spending
Ditch the “a little won’t hurt” attitude. The smallest purchases really add up and burn a hole in your pocket. Soon enough you realise you’ve chipped away at whatever cushion you had in place. Tracking spending holds you accountable. Once you have a fair idea of where your money is going, you will be able to cut back and make smarter spending choices altogether.
Stick to cash
Forget about your credit cards for a while. By doing so, you forcing yourself to stick to spending only what you have. When money runs out, you know you’re done spending. It’s easy to whip out a credit card but it plays a big role in people’s overspending. With cash in your hand, you can physically see how much you have, and how much money is reducing with each purchase.
So, give your credit cards a break and stick to cash. Keep all your weekly money in one envelope.
Create a budget
Create a budget and to stick to it. You may have to sacrifice some comforts, but it’s all worth it in the long-run. Take a look at what you bring in and what you spend. Seeing how much you splurge can be a huge wake-up call. Start a spreadsheet and categorise your different expenses and types of income. Then, test Your Budget. Keep a track of the what you spend going forward. Compare them to what you’d planned and adjust your numbers accordingly.
Start saving for non-monthly expenses, expenses you pay less often. Things like subscription service renewals. And separate needs from fun. If you find yourself overspending on ‘fun’, keep that money in an entirely separate bank account from your “needs” money.
Start with a spending plan
The 50/20/30 rule is a great way to map out your expenses. It is flexible approach to planning out your money and keeping your finances on track. 50% of your take-home pay goes to needs, 30% towards want, and 20% goes to future you.
Set short term goals
It’s a great way to stay motivated and remind you of the reasons you’re cutting back on.
Setting feasible and attainable short-term goals can help you to save and change your habits. It can be challenging so give yourself a pat on the back when you achieve these goals.
This is like a cheat meal. Putting yourself on a strict budget can help you save money but can also tempt you to shop out of limits soon after. So, give yourself little rewards here and there to stay on track!