The majority of people don’t know how to manage their finances well since they weren’t taught how to do it when they were very young. Since these bad spending habits might come from a long time ago, it may seem that they are impossible to change them, but they aren’t. However, it will certainly take some willpower and persistence. It is estimated that it takes 30 days on average to form a new habit. Here are some tips on how to break bad spending habits:
Write It Down
One of the most effective ways to change a habit is to find out where and why you are doing something. Therefore, it is a good idea to start writing every expense you have for at least a month to create the habit, so that you can create a plan to change it. There are plenty of apps like Mint, YNAB, and EveryDollar that help you do that so that you don’t have to create lots of Excel spreadsheets.
Be More Aware
Most of the time we do things on automatic and don’t even think about it or realize what is going on. It is crucial to think every time you pull out your credit card. What was the trigger? Was it because you’re anxious or bored? Identify the reasons why, the emotions involved, and the warning signs that might set you off to impulse buying. That way you can create a plan to stop the bad spending habits more easily.
Most people fail at setting realistic goals for themselves. When changing a habit, it is easier to just start small and work your way up from there. You could, for example, start by cutting costs on monthly bills, make meals at home more often, and set a goal of saving $1,000. A good strategy is breaking a goal into smaller goals and setting deadlines for each one. Remember, a goal must be SMART – Specific, Measurable, Attainable, Relevant, and Time-based.
A good way to change a bad habit is by replacing it with a good one. Find other ways to distract yourself in which you don’t spend much or any money at all, like camping, taking a hike, reading, playing board games with your family, and many other things. You can also do some research and find a cheaper alternative to the thing you want to buy, as long as it’s not done very often so that you don’t fall back into your old ways.
Have Financial Goals
Do you spend money on trivial things and your bank account ends up in the red? Setting a big financial goal might help you motivate yourself about saving and investing your money. These could be buying a home, starting a business and being your own boss, saving for a vacation, or even paying off debt. Reminding yourself all the time that you want to accomplish this goal by writing it down, adding it to your phone’s home screen, or anywhere you see often is crucial to motivate you to take the steps to accomplish it.
Celebrating every single milestone you reached is crucial to keep you motivated, but you should be careful not to overindulge yourself and fall back into your old habits. You can celebrate it in many ways, such as ordering takeout, binge-watching your favorite series on Netflix eating popcorn and drinking, buying an outfit, or anything else that you do for fun. And it’s also important to set a specific day like once a week, or once or twice a month so that it motivates you to be more disciplined during the rest of the days.