How to Break Four of the Nastiest Spending Habits

Even seemingly small spending choices have long term financial consequences. Whether the consequences are good or bad depends on the individual and their situation. Impulsive spending and lack of financial planning can lead to bad credit, bad debt, and a lifetime of bad headaches. But a consistent effort at making sound decisions definitely ends with a solid financial picture.

Every dollar that is added or subtracted from a bank account is attached to a possibility. This could mean saving money for a dream house or vacation-every penny counts. Or withdrawing at the wrong time opens up possibilities that include overdrafts and a lack of emergency savings. Not all spending is negative, but the nastiest spending habits can have a severe and lasting impact.

Topics:

1. Tracking Spending

It may be surprising to some people that financial skills only involve breaking a few bad money habits. Keeping up with money is one way to get on the fast track to reaching financial goals. Most people do not keep an account of what goes out of their accounts. Gone are the days of manual bank account ledgers. This beneficial habit is a snap to do in the digital area of today. 

This not to say keeping up with spending is no longer necessary. In fact, it’s easier than ever to spend money quickly and forget about it the next second. Staying on top of account balances is even more important, but the methods to do so are much more simplified. 

Key points to keeping track of spending:

Another idea is to have a separate account for shopping or other non-essentials.  Whatever method is used, it is imperative to know account balances at any given moment. Not keeping track of finances is a road to overdraft fees, closed accounts, and potentially bad credit.

2. Spending Without a Plan

A financial plan, also known as a budget, serves as a way to spend and save money effectively. A habit of spending without a budget can be disastrous to the bottom line for many years. Without a budget, there is no record of where money goes.

Only 47 % percent of Canadians use a budget to plan their spending. But Canadians are feeling more in debt than ever with 90% saying they have more debt today than five years ago. ~ Practical Money Skills

The habit of spending without a plan is often due to common misconceptions about budgeting. Some people don’t budget because they believe that only certain groups of people need to maintain a financial plan. If they are not in these groups, they believe that a budget is a waste of time and energy.

Misconceptions about budgeting include:

• Budgets are needed for low income people only.

• Only people who are big spenders need to budget.

• Just people with a heavy debt load have to budget.

Budgeting is actually a universal financial tool. Following a budget trains individuals to live on less money than they make, which they can save for emergencies or luxuries. A budget is also a discipline tool that halts unnecessary spending when used correctly. Spending without accountability is a nasty habit with a bad ending in the future. 

3. Impulse Purchases

One way to identify an impulse purchase is that the spender is hit with a bit t of buyer’s remorse afterward. The uplifting feeling of snatching up that “something” they wanted is replaced later on with sadness or guilt.

Every human on the planet has felt excitement or joy after buying something they want or giving a gift to someone else. But that is not the same as using spontaneous spending as the only way to happiness.

There is a middle ground between a cycle of wild uncontrolled spending and stingily hoarding every penny.  Keeping track of money and maintaining a budget will create extra cash to spend on whatever is desired. Having an actual category worked into the budget for this purpose is an ideal way to scratch the itch to buy something as long as the spending spree ends when the money set aside is spent.

4. Buying Convenience

This is one of the nastiest spending habits because everyone has done it in the past or is doing it now. Who can resist shelling out a couple of extra bucks to save a little time or trouble? It is next to impossible to try to live in this world without taking advantage of a way to get out of a jam. But the key to this is habit. When paying for convenience becomes a major expense, things get nasty.

There are some things labeled conveniences that are actually necessary. For instance, people who live in big cities like New York pay for taxi or other driving services to get back and forth to work. This expense would be considered necessary for employees who work miles away from home. Inclement weather can make paying for a driver a necessity even for people who live a few blocks from home. Braving a windy walk in a blizzard is not necessary to save a few dollars.

Eating is at the top of the list of ways people pay for convenience. It used to consist of picking up a fast food meal on the way from work. Now, the same food can be delivered right to the front door at additional cost. Some tips to curb making conveniences a major monthly debt:

• Keep a separate envelope for restaurant purchases only. When it’s gone, it’s gone – which is an incentive to avoid eating out every day of the week.

• Commit to walking or biking to work (if possible) each day that weather permits.

• Make it a goal to prepare a week’s worth of meals as often as possible. Store proportions so they are easy to grab and heat. 

• Share the cost of transportation, get a co-worker to share a ride or carpool.

• Avoid upsizing fast food meals.

Replacing Bad Habits

Spending is not the only area that is rife with bad habits. People smoke, overeat, don’t exercise, and engage in other bad habits which have an adverse effect on their quality of living. With the start of each day comes the opportunity to commit to change. Thankfully, millions of people break bad financial and other habits with fantastic results. 

Sacrifice and discipline are the main elements needed to break any nasty habit. When it comes to finances, it is also helpful to focus on the future consequences while working on developing healthy habits. Creating and setting good practices in place of the bad ones can be a challenging but proactive way to turn things around.