Stop Overspending! Tips and Tricks to Better Budgeting
A little planning can keep you from overspending. Learn how to budget and curb your poor spending habits.
Not budgeting can lead to serious financial problems. If you don't have a budget and feel that you are doing just fine, think again. Money could be slipping through your fingers and you don't even know about it. Consider a few poor spending habits before you shun the idea of budgeting aside as "unnecessary."
Poor spending habits
Impulse shopping. Everyone has done this. If you have ever walked into a store and purchased something, not because you entered for that purpose, but because you saw it, that is impulse shopping. How many times have we as individuals bought things because they were on sale, looked like fun, or just because we could? Believe me, these things add up.
Purchasing overpriced brands: This is another major mistake that people make. Sometimes the only difference between a well-known brand and a no-name brand item is the level of marketing. Many times lower priced foods have the exactly the same ingredients as more costly brands, and high-end clothing has the same durability as cheaper fashion choices. More money does not equal higher quality every time. It takes some know how to determine when, but just remember that fact. You should never stick to a certain brand just because of the name.
Maintaining rituals that include spending money. Your coffee in the morning, your lunches out, and your pizza on the weekend add up. If you spend money at the vending machine at work, that adds up, too. Spending $10 a day on miscellaneous snacks, food and drinks, during work adds up to $2,400 per year.
Counting credit cards as an asset. Your assets are defined as the things that you own that have value and can be used to meet debts or commitments. Your credit cards are not an asset. When you use your credit card, you are adding to your debt. Credit is not an extension of your income, but it is meant to build a trust between yourself and lenders. Credit cards are a way to prove yourself trustworthy with money that really isn't yours. Keep in mind that you are just borrowing the money.
Steps to better budgeting
Plan your purchases, even the small ones: If you make a list before you enter a store, and stick to it, you will save money, period. Whether you are going to the grocery store or to the mall, plan what you will purchase, or at least set a spending limit and don't go over this it. If you see something that you want but did not plan to buy, or something over your limit, wait. Chances are you can do without it if you forget you saw it after two weeks.
Consider shopping "no frills": Sometimes a brand name is just a brand name. Trial and error is warranted when it comes to food in particular, but don't be stubborn about switching to a less expensive brand.
Seek less expensive routines: Food and drinks on the way to work, during work and after work are the most common ritual spending habits in the country. Buying coffee, lunch and snacks at the grocery store will save you money. Pack it up and bring it with you. Maybe you won't do this everyday, but doing this twice a week can save you $500-$700 per year. You might even want to consider cutting back on the amounts you eat or drink (maybe you'll lose weight, too).
Keep tabs on interest-bearing debt: Look at your statements closely and find out how much of your monthly payments are actually reducing the principal amount that you owe. Consider paying more per month to bring down the principal or consolidating your bills. If the bulk of your monthly payments are simply wasting away on interest, it is time to get rid of that debt. If you can find a lower interest rate, consolidate your bills. Be sure not to focus on lower monthly payments, but reducing the amount of interest you will pay overall.
Quit your bad spending habits and take control of your finances. You can do better than you are now. Start budgeting, and improve your financial situation.
Poor spending habits
Impulse shopping. Everyone has done this. If you have ever walked into a store and purchased something, not because you entered for that purpose, but because you saw it, that is impulse shopping. How many times have we as individuals bought things because they were on sale, looked like fun, or just because we could? Believe me, these things add up.
Purchasing overpriced brands: This is another major mistake that people make. Sometimes the only difference between a well-known brand and a no-name brand item is the level of marketing. Many times lower priced foods have the exactly the same ingredients as more costly brands, and high-end clothing has the same durability as cheaper fashion choices. More money does not equal higher quality every time. It takes some know how to determine when, but just remember that fact. You should never stick to a certain brand just because of the name.
Maintaining rituals that include spending money. Your coffee in the morning, your lunches out, and your pizza on the weekend add up. If you spend money at the vending machine at work, that adds up, too. Spending $10 a day on miscellaneous snacks, food and drinks, during work adds up to $2,400 per year.
Counting credit cards as an asset. Your assets are defined as the things that you own that have value and can be used to meet debts or commitments. Your credit cards are not an asset. When you use your credit card, you are adding to your debt. Credit is not an extension of your income, but it is meant to build a trust between yourself and lenders. Credit cards are a way to prove yourself trustworthy with money that really isn't yours. Keep in mind that you are just borrowing the money.
Steps to better budgeting
Plan your purchases, even the small ones: If you make a list before you enter a store, and stick to it, you will save money, period. Whether you are going to the grocery store or to the mall, plan what you will purchase, or at least set a spending limit and don't go over this it. If you see something that you want but did not plan to buy, or something over your limit, wait. Chances are you can do without it if you forget you saw it after two weeks.
Consider shopping "no frills": Sometimes a brand name is just a brand name. Trial and error is warranted when it comes to food in particular, but don't be stubborn about switching to a less expensive brand.
Seek less expensive routines: Food and drinks on the way to work, during work and after work are the most common ritual spending habits in the country. Buying coffee, lunch and snacks at the grocery store will save you money. Pack it up and bring it with you. Maybe you won't do this everyday, but doing this twice a week can save you $500-$700 per year. You might even want to consider cutting back on the amounts you eat or drink (maybe you'll lose weight, too).
Keep tabs on interest-bearing debt: Look at your statements closely and find out how much of your monthly payments are actually reducing the principal amount that you owe. Consider paying more per month to bring down the principal or consolidating your bills. If the bulk of your monthly payments are simply wasting away on interest, it is time to get rid of that debt. If you can find a lower interest rate, consolidate your bills. Be sure not to focus on lower monthly payments, but reducing the amount of interest you will pay overall.
Quit your bad spending habits and take control of your finances. You can do better than you are now. Start budgeting, and improve your financial situation.
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