14 Dec How To Lower Your Spending Habits

If you’re struggling to make it to end of the month with your income, and find that you spend most of your money shortly after payday, you might have a spending problem that could eventually land you in debt. Most of the time, consumers become over-indebted because they cannot manage their spending habits, especially once they have been granted access to loans and credit.

One way that consumers are able to afford big ticket expenses like vacations, weddings, vehicles and homes is by getting a loan. It is also common for spending habits to spiral out of control when consumers have credit cards and store accounts to rely on. It can feel exciting to enter a store and buy the things you love, without having to pay for it upfront – the truth is that the more credit you use, the more you pay back on interest and the longer it takes to free yourself of debt.

If you are trying to avoid over-indebtedness, or if you have recently completed Debt Review and want to improve your habits with spending, here are some tips from our expert True North Debt Team:

Draw up a Monthly Budget

If you don’t have a spending plan drawn up, you can quickly lose track of where your money goes. If you track your expenses for a month, you’ll be surprised to see how much you can actually cut back on, and you can base your budget on the list of expenses you have tracked. Consider your net income, how much you spent in cash, debit and credit transactions, and if your expenses exceeded your income. Then identify where you can cut back on unnecessary spending. You also need to adjust your budget according to any adjustments that happen your income.

Limit your Credit Card Purchases

It is okay to use your credit card for unforeseen expenses or once-off purchases you know you can manage to repay. The problem comes when you start relying on your credit card, or store accounts, to fund everyday purchases and reckless spending sprees that afford you a lifestyle not within your means. Your credit becomes harder to pay off as your purchases increase, and your once reasonable monthly repayment can easily become unaffordable if you are not careful. It helps to leave your credit card at home when you go out, so that you cannot use it without careful consideration.

No one acquires debt with the intention of becoming over-indebted, just like no one wants to develop poor spending habits.

Spend within your means

Your budget will give you an indication of how much you can afford to spend for fun, like going to eat out, watch movies or buy expensive clothing. Allocate a certain amount each month to having a good time, and don’t go over this amount – there are plenty of local specials that can stretch your spending budget, so keep a lookout for promotions and deals.

Have Short-Term Financial Goals in place

A great way to motivate yourself to spend less is to set achievable and realistic short-term goals, which will help you spend less. For some, a short-term financial goal could be saving even R100 each month, while for others it can mean cutting back on weekly takeaway coffees or treats while at work. Small changes, like packing a lunch to work, leaving your purse at home when you aren’t planning to spend money, and limiting your outings and shopping trips, can make a big difference.

These are just some ways that you can lower your spending habits and be more proactive in making your money work for you.