You’re finally emerging from a boatload of debt, and that’s cause for congratulations. It took a lot of patience and diligence, but you did it. What’s just as praise-worthy is the fact that you see what got you in trouble in the first place: excessive spending.
Indeed, getting control of your spending requires budgeting and living within your means. It means changing how you think of money so that you develop good habits – tendencies that are repeated regularly, and in so doing, occur almost subconsciously.
In that light, here’s what you should know about understanding and developing healthy spending habits.
As we say, a habit – good or bad – is an acquired behavior pattern that is followed so regularly that it’s nearly involuntary.
Some common unfavorable spending patterns include:
- Mishandling savings goals. Do you know whether you’re saving enough, or how much you’re saving? Do you know, based on your age and earnings, how much you should be saving? If not, the savings portion of your budget needs a new focus.
- Not tracking expenditures. If you’re broke by week’s end and can’t really say where your cash went, you’re liking spending excessively on “wants” instead of “needs.”
- Being behind on bills. If this is a habit, you wind up wasting money on interest charges and late fees.
- Spending impulsively. This happens when you buy things without comparison shopping, waiting for sales, or seeking out discounts. You also might purchase sale items you don’t need simply because, well, they’re on sale.
- Shopping by habit. You love to shop; you get a kick out of it. When you travel, for instance, one of the first things you do is hit a boutique. These unplanned purchases can get you in trouble. This is partly why debt consolidation tips for Floridians are on the upswing. Among residents seeking debt relief, credit card utilization is 74%, compared with a national utilization figure of 25%.
- Buying small items. A LendUp study found that millennials who regularly shell out for their favorite coffee do so to the tune of $38 a month. At the same time, 27% of respondents reported spending more on java than they were saving for retirement.
How Do Habits Become Habits?
For one thing, we tend to do what our parents or other influential people around us do, subconsciously or not. If your father wore good cologne every day, you may do that too. You also may not fully realize that not everyone engages in this behavior.
Also, you may be surprised by the extent to which society and cultural norms influence our spending. Perhaps one culture spends a lot on celebrations when a girl reaches a certain age, while another spends money annually on large family reunions, often involving travel. Further, wealthy people may have spending habits that differ vastly from someone raised in relative poverty.
Religion can also dictate how much a person spends. For example, some people believe they must tithe regularly and donate money to their church. Then there’s the role the media plays in our spending habits. Perhaps a favorite TV character always ate certain foods or wore certain clothing, and you emulate them without thinking.
One also can’t discount personalities and experiences in the formation of habits. For example, you and a sibling may have been raised in the same house, yet one of you is on the extravagant side, while the other is an inveterate saver.
Understanding and developing healthy spending habits is the key to staying out of debt. What you want is for the habits – healthy habits — to become so ingrained that you perform them without thinking. They become a part of your everyday existence and will serve you well throughout your financial life.