If it’s the end of the month and you are wondering where all your salary has gone again, most likely you have problems with financial self-control. If you want to always have money, then you should learn to control your spending. In this article, you will find recommendations on how to take control of your budget.
Surely several times a day you spend money on things that you don’t really need. A bottle of Coca-Cola from a vending machine, a glass of coffee from an expensive fashionable coffee shop, lunch with colleagues, a new game for your iPhone… The list goes on. In any case, you spend a couple of hundred (or thousands) dollars on every little thing and immediately forget about it.
The reason for this behavior is the lack of financial self-control. Over and over again, you make small expenses without thinking about the long term. But here’s what the lack of self-control threatens:
- you don’t get closer to achieving big financial goals;
- you have to borrow money;
- you do not know how much money you will have in a day or in a month;
- you are constantly short of money.
Of course, giving up your usual lifestyle is not easy. Making a long-term plan is harder than just wasting money and indulging yourself in small pleasures. But if you want to live in prosperity and not worry about your own future, you need to be able to control yourself and your spending. Therefore, we will tell you how to gain self-control in matters related to money.
1. Stop making excuses
Every time you come up with an excuse for wasting your money on worthless purchases, you prevent yourself from starting to do financial planning.
When you buy something unnecessary today, you are depriving yourself of something important in the future.
Maybe this is really just a small thing. Maybe you really want to buy it. Maybe you need a purchase to impress someone.
But if you want to live well, stop making excuses for your impulsive purchases. Just understand: when you buy some bullshit, you are taking a step back on the road to your financial well-being.
2. Before every purchase ask yourself: “Can I do without this thing?”
In order to control your financial life, you have to develop the healthy habit of evaluating every purchase. And it’s not about cost now.
Do you really need this thing? Can you do without it? And is there a cheaper analogue? Ask yourself these questions every time you are about to make a purchase.
Financial self-control is the ability to say “no” to things that you would have said “yes” to without hesitation.
Ask yourself: “Can I do without this thing?” If you answer yes, then you don’t need to buy anything, it is better to set aside money for more important things. If you answer “no”, then ask yourself the following question: “Is there a cheaper analogue?”
This will help you learn to evaluate and accept the consequences of your every decision and action.
3. Give up credit cards
To stop “being in poverty” every month and start controlling your finances – stop using credit cards. This is one of the most “toxic” types of debt, where high interest rates are charged. Try to close your liabilities to the bank. Ask the lender for the exact amount you must pay. Determine the term and maximum monthly payment that you can pay to cover the debt and that will not hit your base monthly budget.
Make debt repayment a priority, and after you say goodbye to it, get down to your financial goals. Try to repay the loan yourself. Do not take another loan to pay off your monthly payment. This is what drives a person into a deep hole in debt. If you have absolutely nothing to pay with, it is better to borrow money from friends or relatives.
4. Visit places where you like to spend money, without a card and with a little cash
Most people have places where they are unlikely to resist the temptation and are more likely to spend a lot of money on what they want without even thinking about the consequences. A cafe. Book store. Electronics store. Clothing store. Everyone has their own weaknesses.
You probably expect advice never to visit such places again. But this does not teach you self-control, but only problem avoidance.
We offer a much smarter recommendation. Visit such tempting places from time to time, but first decide how much you are willing to spend within reasonable limits.
Leave your credit card at home, you only need a little cash. If you have not decided exactly what you will buy, go without any money at all and take a closer look. Then go again with a specific amount to be paid for the coveted purchase.
This process (especially repeated over and over again) teaches you to resist temptation. And resistance to temptation is the basis of self-control.
5. Focus on participation, not shopping
Busy people often buy things just to keep in touch with their hobby or passion.
For example, Alex passionately loves to read, but life has developed in such a way that there is almost always not enough time for deep reading. But he keeps buying books that he would like to read (and hopes to read them sometime later). This is a psychological trap: buying replaces execution.
Do something rather than buy substitutes. If not having enough free time is the problem, start by revising your schedule.
Participation in something interesting to you is an incredibly effective way to get rid of the obsession with spending more and more money on things that replace participation itself. First, read the already bought books, and only then buy new ones.
6. Choose the right communication format
We all go out to meet other people, spend time away from home and participate in some kind of social activity. Most often, these meetings take place in clubs, restaurants, shops and other places where you have to spend a lot of money.
For example, you go out with friends for lunch, then go to the movies, and then still decide to look into a bar. And your wallet already lacks a couple of bucks.
Beware of this format of communication. You don’t have to spend a lot of money to have a good time with your friends. For example, you can gather at someone’s home or anywhere else where spending money is not a defining activity but part of the experience: play football in a nearby park or go for a picnic.
Perhaps some of your friends will refuse such a pastime. Well, this is a great test to determine which of your acquaintances is more interested in going out and spending money, and who wants to chat with you.
7. Keep track of your expenses and revise them periodically
The biggest challenge with tracking spending is that people usually don’t have one place to collect data on all their spending and see where the money goes at all.
The solution is simple: track your expenses and write down where you spend every penny. For convenience, you can break down all spending into categories: food, entertainment, clothing, household chemicals, transport, large purchases, utility bills, and so on.
You can use one of the applications to control your personal finances. For the same purposes, a regular notepad and a spreadsheet on a laptop are suitable. Regardless of which tool you choose, the goal remains the same: record your spending every day, sort it by category, and analyze it to see which categories you overspend.
Such a revision of spending is almost always a discovery for the person. Think carefully about the categories of expenses that impressed you the most. Were these purchases really that important to you? Most likely no. What expenses or specific monthly purchases can you completely opt-out of? At least a few of these will definitely be found.
8. Transfer money to a savings account automatically
There is one well-known old rule – pay yourself first. This means that the first thing you have to do is pay off debts / loans and save money for the future, and only then decide how to spend the remaining amount.
The easiest way to stick to this rule is to automate the process. As soon as the salary is credited to your card, 10% will be immediately transferred to your savings account. If your bank has such a service, make sure that utility bills and loans can also be paid immediately.
The more operations you can do on the machine, the better.
9. Ask close friends and family for help
A trusted circle of friends and family can be very helpful when it comes to personal change, which includes gaining financial self-control.
They can also give you very helpful advice that suits your situation. They know you. They know almost everything about your business, and sometimes they even know better than you.
In addition, it is always great if there is a person nearby who cares about you, provides support in difficult times. Just talk to someone when a change begins to occur in your life. This is great motivation.
Also, your friends and family can be great role models. Perhaps you have a friend who has achieved the same financial goals that you plan to achieve. Use him or her as a mentor to follow the same path. Learn from his or her experience.
10. Don’t give up when things don’t work out
You can make mistakes once or twice when planning your expenses. You can buy something without thinking. You can make a purchase that you will regret later.
You might think that self-control is not about you at all and you shouldn’t even start.
Do not worry. Financial progress is a story about the fact that there is at least one backward two steps forward.
The goal is to strive to be better than you were before. If you make a mistake, don’t dwell on it. Instead, understand the reasons for your behavior and try to avoid it in the future.