Do you sometimes spend money out of habit? Like any habit, unhealthy spending patterns can be replaced with more positive behaviors. Here’s how:
- Monitor your accounts. Review your checking, savings, and credit card balances at least once a month. In addition, use a spreadsheet or check register to maintain your own set of records. This may help you catch discrepancies and avoid overdrafts.
- Automate savings. Set up a monthly transfer from checking to savings. Use this money to build your emergency fund or set aside cash for a vacation or major purchase.
- Shop from a list. A list will help you stay on budget and avoid impulse purchases. In addition, refrain from buying something just because it’s on sale.
- Set rules. Rules are a good way to change your spending behavior. For example, if you order takeout during the week, you can’t get it on the weekend.
- Ask a friend to hold you accountable. Having someone who will periodically ask “How is your house savings plan coming along?” will help you stay on track. Share your goals with people who will encourage you and celebrate your progress.
- Believe in yourself. Stop saying, “I’m bad with money.” Instead, commit to learning new things about finances and exploring ways that you can strengthen your money management skills.
- Accept mistakes. Creating good financial habits takes practice. If you make a mistake or go on a spending spree, take a step back and evaluate why it happened. Then, start over.
Often, money habits are a result of ingrained behavior patterns related to a person’s self-esteem or how they react to stress. It may be helpful to address behaviors that could be impacting spending decisions.
