How to Create Better Spending Habits
Spending money is a fact of life, albeit one of the fun ones.
Another fact of life: How you spend your money is just as important to your financial success as your decision to save or get out of debt.
Smart spending habits keep you from paying too much for an item, overspending on your restaurant budget, or impulse-buying an infomercial curling iron that doubles as a knife sharpener. Nobody needs that.
When you spend smarter, your money goes further. Read on to discover how you can break bad spending habits and create new, healthy ones.
How to Break Your Bad Spending Habits
Let’s start by focusing on our not-so-great spending habits.
Ever frantically rush to your car after making a purchase to log in to your bank account because you might have spent too much? Maybe you’ve experienced that jolt of happiness when you swipe your card followed by a rush of guilt and shame when you realize you just busted your budget.
As you can tell, our first point of discussion on breaking bad spending habits relates to how you feel. Here’s a tip:
To break bad spending habits, consider how they make you feel.
Most spending feels fun in the moment. It’s in the minutes—or even months—afterward that buyer’s remorse sets in.
Take a moment to jot down the last not-so-great choice you made with your money. Note how you felt when you made the decision, how you felt in the minutes and days after, and how you feel right now.
You might notice a downward trajectory. This is what we want to work to change. Good spending habits might be a tough call at first, but they produce a lifetime of rewards!
Decide Which Bad Spending Habits You Want to Break First
Take a look at your bank account, talk with your spouse, or just look around your house to get a feel for the spending habits you’d like to break. Feel free to start small and select just one or two to address first. A few ideas:
- Going over on cell phone data
- Eating out when you have food at home
- Buying duplicates of items you forgot you already own
- Shopping impulsively online
- Shopping sales because you love the thrill of a good deal
Let’s say you want to stop scrolling through Amazon Prime before bed. You’ll do best to replace this bad habit with a good one. You might decide to use a digital alarm clock instead of your phone alarm, so you can leave your phone across the room at night. Now you can spend 30 minutes reading a juicy novel or helpful book before you hit the lights.
Continue working through your list of bad spending habits in this way:
- Recognize the spending habit you want to break.
- Brainstorm ways to replace the bad habit with a good one.
Replace Bad Spending Habits With Good Ones!
By putting good spending habits in place, you’ll eventually make smart money choices without much thought or effort. Let’s look at a few more options you can try as you work to override bad spending habits with good ones:
1. Give yourself a solid reason to spend wisely. Spending or saving makes a lot more sense when you have a target to hit. We do this by following the Baby Steps. Making money goals and keeping them in mind whenever you swipe your card or hand over cash will put your spending in perspective.
2. Live on a budget. Creating a plan for your money allows you to prioritize your spending. Put your money goals—perhaps getting out of debt or going on a vacation—at the top of your budget (after giving and necessities, of course). Saving for a family getaway makes it easier to not spend money on a daily cappuccino run.
3. Actively practice gratitude. Take a moment every day to write down or verbally acknowledge the good in your life. After all, there’s so much good. In fact, did you know that a salary of $32,000 puts you in the top 1% of earners in the world?¹ You may not feel “too blessed to be stressed,” but a regular reminder of this truth can help curb unnecessary spending. After all, if we can be grateful for what we have, we might just realize how little we really need.
4. Research before you shop. If you’re in the market to buy a big-ticket item such as a TV or washer and dryer, don’t point at a commercial and say, “I want that one!” Do some research, compare prices, and select a quality model. When you have more information, you can make a better decision.
5. Avoid your spending triggers. We all have those places or people that make us want to spend a little too much. Maybe it’s the sweet smell of the bakery around the corner, or a friend who tells you how great that purse would look with those shoes in your closet. Limit your contact with those triggers, so you can learn to spend only what you’ve planned to spend. Try walking a different route, so you don’t pass by the bakery. Maybe you can invite your friend on a hike instead of a mall trip.
6. Find an accountability partner. For married couples, you have a built-in accountability partner in your husband or wife. For singles, your accountability partner could be a trusted family member or a responsible friend. They should be willing to discuss your big money goals and be there to talk through big purchase decisions. Your accountability partner can remind you what you’re working toward.
7. Don’t shop while you wait. It’s tempting to browse online shops while you’re sitting in the car line at school or in the waiting room at the doctor’s office. But those small windows of time can open the door to serious spending that can affect your Baby Step progress. If you know you’ll be waiting in line, keep a book or magazine with you to help pass the time.
8. Develop patience. Ever had buying fever? It’s when you get so excited about something that you buy it without checking to see if you can afford it. Buying in the midst of that fever can lead to a real headache. Instead, take your time and give yourself 24 hours before purchasing. You’ll typically wake up the next day with a little less excitement, which can help you make a more rational buying decision.
9. Look for savings before you buy. If you regularly shop at a certain store, you probably know when they offer their best deals, so wait to shop then. Check out your supermarket’s weekly sales so you can stock up on the sale items you regularly use. Keep an eye on your favorite clothing store and buy out-of-season coats, shirts and shorts on clearance. Sign up for store email updates or apps and check online for coupons before you purchase. A little work ahead of time goes a long way to saving you a ton in the long run!
10. Make room for fun. Spending should be fun! Instead of pretending that spending money is a bad thing, be intentional about setting aside a chunk of money—big or small—each month. That way you can browse your favorite store, enjoy a date night with your spouse, buy a new tool for the garage, or take advantage of a great deal on Amazon without any guilt. Give yourself permission to spend some money and you won’t be tempted to spend all the money.
Increasing your income and saving money aren’t the only ways to make a difference in your budget. As you can see, how and when you spend makes a huge impact on your ability to achieve your money goals. Now it’s your turn to start winning with money by establishing some smart spending habits of your own!
Ready to take the first step toward better spending habits? Create a free EveryDollar budget, determine how much money you want to spend in certain areas of your life, then go spend it!