a person counting money trying to budget

How to Create Better Spending Habits

Spending is one of those fun facts about life. The thought of getting access to anything you need as long as you have cash can be thrilling and one may be willing to do anything for this privilege. However, it is important to realize that how you spend your money determines your future financial success and the ability to get out of debt. Spending is inevitable, but prioritizing what’s important is how you can start spending smart.

Smart spending means getting the best deal, buying what you must have and staying conscious of where every penny goes. As the old saying goes, the smarter you spend, the further your money will go. So how do you break bad spending habits and spend better?

Set and stick to your goals – As the old adage says, if you do not know where you are going, any road will get you there. The same can be said with spending habits; if you do not have any goals set in terms of your financial standing, you will always fall for anything that comes your way. It is therefore, advisable that you set both short term and long term goals that will see you through a certain period. Ensure that you always limit yourself to prioritized and realistic goals that will set the pace for the future.

Change the notorious financial habit – If you are a ‘big’ spender, then you will notice that there is always that one financial habit that keeps you spending without planning. You will need to assess your spending habits to pick out and reduce this habit or stop it altogether. Once you master the art of changing this major habit, then you can replicate it to the other areas of your expenditure.

One of the best ways to change your spending habits is by keeping a log of what you’re spending. It’s not simply impulse buys, but some are ingrained. If you have a rough meeting at work, maybe the coffee shop just down the street is your go-to stop. Notate your expenses so you can track what triggers you to spend more.

Do enough research before shopping – If you love shopping, then it may be time to take note of how you do your shopping. Do you simply go to the market and pick whatever pleases your eye? This may be one of the ways you are losing your money. Before shopping for anything, take your time to research their prices while at the same time comparing quality. This is even easier in the digital age where all you have to do is go online and compare the prices from different stores.

Stay away from your spending triggers – There is always that place you will go and end up spending way more than you had planned. On the surface, this may sound like we’re talking about casinos, but it’s much more than that. If you go out to the movies and always buy candy (or even buying candy in advance) or always buy a snack as you grocery shop, these are all areas where you may be adding to the initial cost of a trip when smaller purchases are adding up. Buying that new album may not seem like a big deal, but if you don’t jot down that you did it, then you may forget that it was only 2 weeks ago that you made that purchase and then purchase another new album thinking it’s a new day, a new budget.

Triggers aren’t limited to places either, as this can also apply to some people. Everyone has a friend who intentionally or unintentionally, entices you to spend more than you had budgeted. For better spending habits, it is advisable that you stay away from these triggers or mitigate as best you can.

Everyone will always have that spending habit they hate to love. By first determining the leading habit that needs to go, you are already on the right track. However, this is not to say treating yourself once in a while is a crime. It only becomes a problem when it turns into a habit that slowly drains your finances unnecessarily.

About the author

Seattle CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. He is a graduate of Washington State University and the University of Washington School of Law.