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When it comes to money, spending it is easy — a little too easy, in fact. Spending it wisely is where many of us stumble.
Too often we work doggedly chasing the almighty dollar then toss it about without a second glance. Healthy spending habits are about taking that second glance and then perhaps a third and a fourth one, too, to set you on a course for a solid financial future. Just like your physical health depends on daily habits like exercise and nutrition, your financial health depends on the daily habits you practice with your money.
Healthy spending habits aren’t that hard, either. We’re not talking about sticking to a bare-bones budget where every penny goes into savings and there’s no room for a fun purchase occasionally. We’re talking about simple, small things you can do that can make a big difference to your bottom line over time.
Here are 10 easy ways to spend smarter and save more.
It’s not exactly a magic trick, but creating a budget is the one thing above all others that can do the trick to help you improve your spending habits. A budget gives you a good picture of where you intend your money to go. You can then compare it with where your money actually does go.
There are plenty of ways to make a budget and track your spending, including software, apps and old-fashioned pen and paper. It doesn’t matter so much how you make a budget as that you include all the key components and that you monitor it and adjust it along the way.
2. Change things up
While collecting your spare change in a jar is fine, since most of us pay with cards for purchases these days, you’re not likely to collect a whole lot. There are, however, apps like Acorns that will collect the “spare change” from your purchases and deposit it into a savings or investment account. So, if, for example, you purchase a latte for $3.44, then 54 cents is deposited into your account. You likely won’t miss the small amounts, but over time, they can add up significantly.
3. Eliminate impulse purchases
Many times we buy things on a whim without even thinking about them. Online shopping makes impulse buys easier than ever. To help you be more thoughtful about purchases and quell that awful buyer’s remorse, you can establish some rules for yourself.
For example, you may want to set a personal mandatory waiting period for any online purchases. Tell yourself you can shop and put things in your online cart all you want, but they must sit there for at least a week before you hit “Buy.” If you still want/need the items after that and you have room for them in your budget, then click away.
When you head to the store, create a list and only buy those things on the list. If there’s something else tempting, put it on the list for next time and then when next time rolls around, see if you still want/need it. P.S. Having a heart-to-heart with yourself about the differences between “want” and “need” doesn’t hurt, either.
4. Automate to accumulate
Sure, you may have the best intentions to transfer money into savings or an investment account each month, but then you decide to buy an expensive meal out here and buy a concert ticket there; all of a sudden, there’s no more money in your budget, so you skip a month of deposits.
Repeat that a few times and your goals can seriously stagnate. If you set up automatic transfers, the money will go where it should, when it should, and you won’t even miss it.
5. Save when you spend
When you do choose to buy something, make sure you shop around, compare prices, use coupons and do anything else you can to get the best deal possible. Maybe you can buy a similar item secondhand or you can borrow it from someone. You can also earn money when you spend by using sites like Ebates and Drop that give you a little cash back on your purchases.
6. Visualize value
Being able to visualize your goals can be a big motivator. If it’s a balmy beach vacation you want to save for, tacking a picture of Bermuda to your refrigerator may make cooking at home rather than dining out easier. If it’s your kid’s college that’s your priority, put a picture of them in your wallet where you’ll see their sweet face each time you reach for your credit card.
Another trick some swear by when shopping is to picture someone holding up the item you want to purchase in one hand and the amount of money it costs in the other. Then, ask yourself which you’d choose if both were offered to you. More often than not, you’ll probably choose the cash.
7. Don’t eat your money
While food is an essential and enjoyable part of life, it’s also one of the areas in which we waste a lot of money. There are plenty of ways to save money on food, though, including changing how you shop for groceries (use an app to compare prices and avoid prepackaged or pre-washed foods) and how you order when you do dine out (skip appetizers, drinks and desserts).
Eating at home is almost always cheaper, so finding ways to make it more enjoyable and planning accurately are good investments as well.
8. Make saving fun
Saving money doesn’t have to be painful and can even be a bit, dare we say, fun. Make up “game” rules for your household that are simple to follow. For example, every time you buy bread, put a dollar in a jar (well, unless you’re following a Keto diet). Every time you watch your favorite TV series, put in $5. Make the rules clear, and hold yourself accountable to keeping them. Then watch those jars fill up.
9. Bill yourself
When you finally make that last monthly payment on your car, student loan or other debt, it’s a fantastic feeling. Not so fast, though. If you keep making that payment but direct it into a savings or investment account, you won’t miss it since you’ve been paying that amount anyway. The money can then accumulate and grow for you.
10. Use credit cards with care
Credit cards are convenient, but the problem is they’re a little too convenient to use and can become problematic easily. There are steps you can take, however, to manage your credit card spending effectively.
You can even earn money using them by taking advantage of rewards programs and timing your purchases wisely. Above all, wise credit card usage takes a healthy dose of self-discipline and a solid understanding that your credit limit is not, in fact, your spending limit.
When it comes to spending smartly, there are no magic tricks, but these tricks can help you train yourself to make wiser choices. A small shift in habits over time can add up to big payoffs down the line.