Let’s face it, we’re all guilty of splashing the cash when we shouldn’t. A little too much retail therapy here, the odd novelty purchase there; it’s human nature to give into our impulses every now and again. However, it seems many of us are constantly practicing bad spending habits, which in turn are negatively impacting our financial status.
Among the many ways to better manage your personal finances, adjusting your spending habits could be key in making significant improvements. Here are four ways to help change your behaviours.
Go cash only
Yes, we are living in an increasingly cashless society, but our propensity towards credit and debit cards has landed the UK in £72.5bn of debt, with each household harbouring an average of over £2,500 in unpaid arrears.
Having a card in your pocket makes it much easier to lose track of your purchases and overspend, whereas you can only spend the cash you have on you. If you’re having trouble resisting temptation, leave your cards at home and instead carry a cash figure you know you can afford to spend.
Want or need?
If you’re being honest about your day-to-day spending, you’ll acknowledge a lot of what you’re buying are luxury items. Whether it’s the morning coffee, a premium lunch or a nice pair of shoes you’ve seen, many items fall under things we ‘want’ rather than ‘need.’
Distinguishing between these two is an essential skill in helping to curb your spending. When it comes to making a purchase, ask yourself whether you truly need the item. If the answer is no, then is it truly worth the asking price? A little more consideration to this will help you eliminate items you’ll barely miss.
Take a moment
Impulse buying is one of the scourges of modern finance management, and with ‘amazing’ in-store deals and the prevalence of next and same day delivery online, it’s easier than ever to follow your urges and buy items without too much thought.
On top of the ‘want and need’ paradigm, taking the time to really consider your next buy will help you avoid purchases you’ll regret down the line. Next time you have a big-ticket item that you fancy in front you, sleep on the decision. Once the initial impulse to buy has washed away, you’ll be able to properly reflect on whether you should make the purchase or not.
Work out the damage
If you’re looking to scare yourself into submission, sit down and work out how much your spending habits are currently costing you. The chances are you’ll be spending a whole lot more than you thought.
Take the daily coffee run, for example. Spending £5 every morning? Multiply that by the 260 or so working days a year and you’ll realise £1,300 of your hard-earned money is going down the drain on coffee and cake annually.
Figures like that should be enough to motivate you to make some changes, and some significant savings in the future.
Identifying areas of unnecessary spending will help set you up for the future whilst improving your quality of life right now. Practicing good habits has become a key life skill for the financially savvy and getting on board could save you thousands a year without too much hassle.