Why Changing Spending Habits Changes Everything

1. Discover your “why”

Understanding the curbing of your spending starts with identifying the real reason behind your financial choices. When you define your “why,” you can stay motivated to make smart purchases and stick to your decision even when it’s tough. 

Take time to reflect on past overspending and how it negatively affected your life — think of those unexpected credit, card, bills, and the financial stress that came with spending more than you intended. 

Consider the advantages of reining in your money to achieve larger financial goals like homeownership, retirement, savings, and maintaining the quality of life you want. Envision your financial wellness if you successfully curb your spending and hold on to that image when you feel tempted to splurge.

2. Review your spending habits

Identifying your unique spending patterns is essential for breaking the cycle of unnecessary spending. To gain insight, examine your bank and credit card statements carefully and highlight discretionary habits such as purchases you regret or impulse buys you barely remember. 

Look for repeating patterns. You might overspend while shopping with loved ones or when online during times you feel bored, frustrated, or anxious. Avoid judgment and simply make a mental note of these patterns so you can recognize them when they’re happening.

3. Redirect your behavior

Once you understand your spending patterns, it’s time to brainstorm ways to disrupt the cycle. Build a strategy around your triggers to reduce spending without sacrificing happiness. 

If you overspend while shopping with loved ones, allow a splurge but set a limit that won’t interfere with your financial goals. For impulse purchases in a store, use a list or shop online and pick up purchases in the store to ensure you only purchase what you need. 

If spending is driven by emotions like boredom or fear, find quick emotional needs that don’t involve spending, such as a walk around the block or calling a loved one for a chat to avoid a purchase.

4. Build a budget

Budgeting helps you stay conscious of how you spend your money and ensures you allocate it toward your financial goals. Create a budget that covers expenses, savings goals, retirement, emergencies, and larger purchases like buying a home or a car. 

Your budget should include an allowance to spend as you wish, setting a dollar limit that gives you freedom to treat yourself while not sacrificing your goals or harming your ability to cover expenses.

5. Pay with debit or cash

Using credit cards can be a great financial tool, but they can also lead to overspend if not managed wisely. Switching to paying with debit or cash, even temporarily, can reshape your habits. 

Making purchases with money in hand helps rein in spending and keeps your account balance visible in real time. Credit cards delay the impact of spending until the credit card statement arrives, increasing the risk of accidentally spend more than intended, leading to overspending and damaging your credit score. 

If you prefer credit card use, consider transferring money from your bank account to the credit card after each purchase to avoid overspending.

6. Make the most of your mobile banking app

Monitoring and reducing spending is easier with your mobile banking app, your best friend in this journey. Set up auto-save to automatically transfer money into savings accounts at regular intervals, aligning with your financial goals. 

Many mobile app budgeting function features let you set limits on discretionary spending and receive alerts when you’re reaching that limit. Even without such a function, your mobile app allows you to review your account balance anytime, anywhere, so you can review your finances before deciding on a purchase.

7. Try a no-buy

A clean break from overspending through a no-buy challenge can work wonders. By going cold turkey, you temporarily eliminate discretionary spending for a set period, such as a week or month. 

With splurges off the table, you create an opportunity for redirecting behavior and forming positive financial habits to reduce spending over the long term. Set rules for your shorter week no-buy to eliminate discretionary purchases entirely, or longer ones where you relax rules to replace essential items, making it realistic. 

Focus on areas like spending on cosmetics, gaming, or clothing, and target that category to control spending. This may feel challenging, but it’s rewarding as strategies help in forming positive financial habits, making your money work harder to achieve financial goals.