Do you struggle to save money? Being disciplined about personal finance isn’t easy, but these mental tricks will help you rethink your spending. With a new mindset when it comes to budgeting, you can put more of your money toward savings without feeling like you’re missing out on exciting purchases.
Add It Up
One of the best ways to deter excess spending is to see where your money is currently going. Reviewing old account statements for your checking account and credit cards takes a bit of time, but once you start adding up how much you’ve spent on various categories, you can just how shockingly high the sum of small, impulse purchases can be.
Look back through 6 to 12 months of statements to get a good snapshot of your spending. But be forewarned that you may balk at the amount you’ve spent on purchases that didn’t give you any pause before. Whether you spend hundreds on clothes, dining out, or other occasional “treats” for yourself, seeing the actual numbers will cause you to reconsider those purchases and whether your money could be better spent elsewhere or stashed away as savings.
Hold That Thought
Try committing to a no-spending freeze for a certain amount of time, such as a week or a month. During this period, you can’t buy anything that isn’t a must-have; paying for necessities like rent, insurance, bills and groceries is allowed. If you have the urge to buy something that would be categorized as a “want” and not a “need,” jot down what it is and how much it costs. Keep your list going by adding any other items you want to purchase during that time.
One your no-spending freeze is over, look back through your list. Add up the costs to see how much you might have spent on things you don’t actually need, whether it’s a decorative chair for your living room, a new sweater or a cup of coffee from Starbucks. You will likely be shocked at how much you saved by not spending on extras, and you’ll realize that the urge has to buy most of the things on the list has long passed.
Out of Sight, Out of Mind
Automatic savings could be the key to curbing your spending. It takes just minutes to set up, but it can have a long-lasting impact on your finances. To do this, set an amount you’d like to be diverted into savings from each paycheck. Set up an automatic transfer to occur on the same day you receive payments from work for the amount you’ve selected. You’ll get a slightly smaller payment each time but having the money you wanted to save immediately moved into another account decreases the temptation to spend it.
Worth Your Time
How much do you earn per hour? If you’re not sure, pull out your last paycheck and do some quick calculations. Be sure to account for how much you make after taxes, not before. Then, keep this number in mind whenever you want to make a purchase. Ask yourself how many hours of work it would take to pay for that purchase. For example, it might take a full eight-hour day to cover the cost of two concert tickets. For a vacation, you might have to work a 40-hour week to cover the costs. Consider whether that purchase is worth your time or if you’d rather save the money for something more practical.
See something you really want? If it’s something you feel like you must have, consider whether you’re able to spend double the cost. If not, you’ll have to wait until you save up that much until you can buy the item. Once the money is saved, reassess whether you still want it. If the answer is yes, buy the item and then place the other half of the money in a savings or retirement account. This method ensures that you don’t make an impulse purchase you can’t really afford.
It’s hard to resist the temptation to buy new things when you’re constantly being bombarded with products and offers that appeal to your tastes. You’ve probably noticed that social media sites like Facebook and Instagram feature ads based on previous purchases you’ve made. In addition, online retailers will continue sending you offers long after you’ve ordered from their website. Because these sources already know your tastes and your spending habits, they’re incredibly adept at finding ways to convince you to spend more.
One smart way to reduce spending is to unsubscribe from any emails and offers sent to you by online retailers. When you don’t know about the latest product releases, sales or discounts, you’ll be less tempted to click over and buy something. You can also unfollow retailers on Facebook, Instagram and other social media sites to reduce how often they show up in your feed with tempting offers.
While you may not need to use all of these tricks, try implementing one or two to start and see if they help curb your spending and increase your savings.