It can take a bit of time to develop smart, positive spending habits, but the benefits of doing so are endless.
Facing financial problems is something most Americans will face at one time or another (if not more), and oftentimes this can be a result of bad spending habits that pile up over time.
It’s important to find a way to bounce back and regain control of your spending as soon as you recognize a potentially growing problem. You can do so with smart, positive spending habits that will ultimately improve the overall quality of life for many Americans.
Maintaining financial responsibility can help keep you and your family out of debt and sustain a strong credit score. It can also help you obtain a much-needed loan when the time comes to purchase a vehicle or a home.
Use these 5 simple tips for developing better spending habits and reap the rewards in your bank account(s) and to your overall quality of life.
1. Set a Monthly Budget
Creating – and sticking with – a budget is arguably one of the most important steps in any adult’s life.
But it can be difficult to determine a budget that is customized to your lifestyle.
Without setting a budget, which means itemizing a list of anticipated income and expenses, people can find themselves in a tricky situation because finances have been stretched too thin.
Utilizing a monthly budget is the best way to monitor monthly spending.
Budgets can be as simple as listing each of your bills and expenses in a spreadsheet on a computer that is only used by you or the family. If that isn’t feasible, creating a list in a notebook works just as well. Creating a budget helps you to see where you may be overspending, such as spending too much on restaurants instead of saving money by cooking at home.
Once the list is in place, create a payment schedule for your bills and set reminders to ensure all bills are paid in a timely manner. Giving a due date to the bill helps keep it top-of-mind.
2. Reduce Credit Card Spending
Having a credit card isn’t necessarily a bad thing. In fact, a credit card can be quite handy in emergency situations.
When used and paid off in a timely fashion, credit cards can help increase your credit score, making it easier to get approved for loans.
But, when bad spending habits accumulate in the form of credit card debt, it can be overwhelming to get back on track.
Unless absolutely necessary, avoid charging an amount that will take more than three months to repay.
Most credit cards also charge a monthly interest rate. So, if you’re only paying the minimum monthly amount, you will pay your credit card company far more money than you actually spent on your credit card purchases.
Opening a savings account for larger purchases or splurges, like a new television or a trip, can help you avoid credit card debt by paying off your monthly credit card bills on time.
3. Reduce Impulse Buying
Balancing a checkbook seems to have gone by the wayside with the ease and convenience of online banking, but checking your bank accounts regularly should be a habit.
Splurges or impulse buys can leave buyers feeling happy in the moment. But impulse purchases can add up rather quickly and take a toll on your financial stability.
If purchases aren’t closely monitored, impulse buys can lead to bad spending habits and deplete a savings account. Hundreds of dollars can be carelessly spent each month and threaten financial stability.
When you want to make an impulse purchase, try to wait anywhere from a week to a month. After this period of time, if you are still thinking about the product and believe it will benefit you, go ahead and purchase. This avoids the “impulse” part and forces you to take time to consider if the purchase is worth it.
When going shopping, take time to plan shopping trips and stick to a list.
If it’s difficult to stick to the list and skip impulse items, try bringing cash with you and leaving credit cards or debit cards at home. This step can help create good spending habits and put you on the right track towards increased financial stability.
4. Take Advantage of Better Pricing
When was the last time you purchased a vehicle?
Whether it was brand new or used, it can still cost thousands of dollars.
And for many of us who use cars every day, it’s an essential purchase that cannot be avoided.
What consumers can avoid is overspending by doing research and comparing prices whether it is a vehicle purchase, household item, or even electronic devices.
Depending on the item, it could be worthwhile looking into a gently used option or one that is refurbished.
Cellphones, for example, are purchased and traded in on a regular basis. When a gently used phone is returned to the manufacturer, the company can then refurbish it and sell it for a lower price.
5. Think of Your Future & Focus on Goals
Keeping in mind the big picture and your financial goals are one of the easiest ways to stay on track when it comes to good spending habits — or, avoiding bad ones.
Understanding the importance of being dedicated to your budgets and future are keys to keeping money in your pocket and helping to ease financial strain.
Eliminating bad spending habits is beneficial, not only for the present, but for the future as well. Life can change in an instant, and it can be hard to keep up if your finances are not in order.
The more proactive you are today, the more savings you will have tomorrow.
To learn more ways to practice good spending habits, ways to save for the future, and how Hudson River Credit Union can help, contact us today.