How to Create Good Spending Habits

Learning how you spend brings clarity to the amount of savings and investments you have accumulated. It also provides and understanding regarding your monthly bills and the comfort level you may have versus the feeling of dread you may experience when managing finances. Your spending habits determine if you are overspending on your budget, impulse buying from the late night infomercial, or if you a resting soundly knowing you have that part of your life under control.

Whatever spending habits you are working with at this point just know there is a solution. When you can identify the problem, you have taken the first step toward a resolution. Everyone can relate to bad spending habits in need of changing once you recognize it is a bad habit. Here is a list of 7 bad habits and the positive habits to replace it with.

7 Do’s and Don’ts of Spending Habits

DO: Positive mindset “I control my money.”

DON’T: Negative mindset “I’ll never have money.”

Adjust your mindset to believe you are in control of your money. Money should work harder for you because you are smarter than it. Stay positive and true to your goals.

DO: Track the money you spend every week.

DON’T: Spending everything you make.

Understand everything you spent last month and plan what you need to spend this month. Tracking your expenses before your money arrives will help determine how much will be left.

DO: Invest in you (savings, investing).

DON’T: Invest in things (clothes, cars).  

Limit purchases that will not increase in value or generate additional money. Your major investment should be in you for now and especially to define where you want to be in the future.

DO: Understand want versus need shopping.

DON’T: Impulse shop.

Marketing experts understand how to appeal to you emotions. They are successful when the $100 you intended on spending turns out to be $300 in spending. Eliminate impulse buying by remaining focused on your initial spending plan and resisting emotional shopping.

DO: Take responsibility for your bills.

DON’T: Pay bills late, or skip payments.

When you create a bill it is your responsibility to manage the payments timely and consistent. Avoid allowing delinquent payments to have a negative impact on your credit score by being accountable and viewed as a creditworthy consumer.

DO: Participate in company sponsored 401K.

DON’T: Ignore investing for the future.

Many companies offer 401K savings and investment as retirement options for the future. By investing and receiving the company’s match this is a great start for you retirement nest egg.

DO: Establish a 12 month emergency fund.

DON’T: Neglect saving for emergencies.

Saving for an unexpected emergency will be less of a shock to your expenses when you have prepared for it. Start creating an emergency fund by saving three months, then six, nine then ultimately 12 months of your monthly expenses in a separate savings account.

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Improving Spending Habits Makes Good Purchase Decisions

Making a few good decisions in succession opens the door to long term financial success. Take the commitment to be disciplined every day when you have to make money transactions. It will require sacrifice on your part but the end results will be exponential. And as a reward you don’t have to give up impulse purchases completely, just remain in control. Put a set amount aside in a “Just for Me” envelope when you can, then at the end of the month you can use it as you wish. When the money in the envelope has been spent, STOP. Your impulse spending is over for the month. The thing you will come to find is not wanting to spend everything in your envelope which (surprise, surprise) will have created another savings for yourself.

Trust and Invest in You.