How to break up bad spending habits
Breaking a habit can be extremely difficult, be it trying to stop binge eating, biting your nails, or instantly opening your phone as you wake up in the morning. We all have them, and we are aware of the struggle that is trying to break those habits.
When it comes to finances, many people find it challenging to monitor and manage their own which consequently leads to creating unhealthy spending behaviour. The good news is that nothing is irreversible so here at House Sales Direct we have not only compiled the most common bad spending habits people have but also ways for you to break free of them and begin your healthy financial well-being.
Bad Habit: Spending More Than You Earn
A massive issue for a lot of people is when they spend more than they earn, and the worst part is that they do not even realise it in most cases. If you are aware of your expenses, know whether you are in debt or not and actively monitor your finances, you can afford the occasional overpriced coffee from Starbucks. However, the problem comes from people not managing their money correctly and simply assuming they have more than they actually do while also being deep into credit card debt.
The first step in fighting your overspending habits is by identifying what is affecting that behaviour. People tend to spend more than they earn for multiple reasons but one of the most common ones would be social pressure. Trying to fit in by buying luxurious items when you cannot afford them just so that you can be like the rest and keep up with the trends. What you can do in this case is trying to silence the societal opinion and limit your spending by setting up a budget and regularly checking and analysing its performance.
“The most important payment you have to make is the one to yourself.”
Alternatively, if you want to be able to afford a luxurious life, you need to find a way to get more sources of income. Consider turning your hobby into a business, start investing or think about growing your personal social media channels.
Bad Habit: Not Saving Money
You would be surprised how many people do not have a savings account or any sort of savings plan these days. The ‘surviving until my next salary’ state is more common than you would think and especially nowadays with the constantly increasing cost of living. It is understandable why people may be struggling as we live in challenging times, however, if you had an emergency fund started as soon as you have begun getting your own money, you would have been feeling much safer now. You do not necessarily have to put aside tons of money every month but as Tesco’s slogan says ‘every little helps’.
The most important payment you have to make is the one to yourself. Paying yourself first, before any other expense you may have, is an essential mindset to obtain on your journey of saving money. Begin by setting up a savings account and short- and long-term goals for the amount of money you wish to have in it by a certain date. That way you could motivate yourself and you could start seeing results in no time. Alternatively, depending on what your bank can offer, you could set up an automated account where every month a percentage of your salary would automatically be transferred to your savings that also earns interest so that you do not have to worry about doing it yourself.
It is good to have a separate emergency fund for occasions such as becoming unemployed. It is considered that having between 3- and 6-months’ worth of living expenses to be good as long as you completely forget about this account and try not to withdraw from it.
Bad Habit: Eating Out Regularly
Have you ever ordered takeaway food even though you had ingredients to make it yourself at home? Or do you simply resent cooking at this point that you prefer eating out? We have all been there and we all enjoy the occasional meal outside in a nice restaurant. However, most of our wasteful spending can sometimes come from those little pleasures and if you have a tendency to do it more regularly and seem to be struggling financially, then consider following some of our tips on how to break that bad habit.
A good suggestion is to try doing your groceries more often. If you have weekly shopping, it is highly likely that you will always have food in the fridge. Perhaps the guilt from having to throw it away can stop you from ordering that favorite takeaway of yours. What would be beneficial to attempt is creating a shopping list and following it because we tend to get distracted in shops sometimes and end up picking out items which are not really essential. If it would help, you could even try online grocery shopping to avoid impulse buying.
Bad Habit: Impulse Shopping
We are all guilty of this one, aren’t we!? It feels amazing to treat yourself to something you love from time to time but it is when we do it excessively that it becomes a problem. According to Harvard Business Review, ‘the first step to breaking a habit (no matter what it is) is to figure out your triggers’. With impulse shopping, there is always some trigger that pushes us to make a purchase and that is why it is essential to identify what those triggers are. The first step is getting knowledgeable about the way we react to temptations and only then we can try to fight them.
It is worth trying to think of how many hours it would take you to work in order to afford a certain item that you want. Most of the times it serves as a wakeup call, making us realise that perhaps we have to save up more in order to buy it in peace. Alternatively, consider sleeping on it because as the saying goes ‘the morning is wiser than the night’ and you may wake up the next day to find that what you wanted yesterday is now less attractive to you.
“We get sucked into subscriptions which we only intended to use for the free trial but ended up forgetting to cancel.”
However, if you cannot resist a temptation, there is another smart solution for you. Simply delete your credit card details from your favourite online websites and unsubscribe from their newsletters so that you do not get tempted into a discount ever again.
Bad Habit: Having Too Many Subscriptions
There are so many convenient services these days that it is almost impossible not to be subscribed to certain places like Amazon’s Prime and Netflix. Setting up direct debits for them makes it even harder for us to review which ones we want to continue using and which ones have simply run their course. Occasionally we get sucked into subscriptions which we only intended to use for the free trial but ended up forgetting to cancel. It is three months later now and you’re still paying for it.
The solution to this one is pretty simple – keep track and review your memberships. You will find that sometimes you have been subscribed to something you are barely using. Thus, make it a habit of checking them every few months and analysing whether you still really need that gym membership or not.
It is important to remember that it would take time to replace your unhealthy spending behaviour with a healthy one. If you do not see results instantly, do not give up and stick with it because in the long-term your effort and persistence would most likely pay off. The sensation of achieving your financial goals and finally breaking free of those unwanted habits would be indescribable.