January is Financial Wellness Month, and one of the best ways to improve your financial wellness is to stop overspending. The less you spend, the more money you have in your account, right? Take a look at your bank account. Are you happy with the amount that is in there? If there was an emergency (car repair, getting laid off) could you survive on that amount for three months? If the answer to either or both of those questions is no, then you can benefit from spending less in your day-to-day life. Here are some ways to kick the habit.
Create or revise your budget. Collect your paychecks as well as receipts from everything you spend money on for a whole month (necessities and non-necessities), add them up and compare them. Try to follow the 50/30/20 rule, where 50% of your income goes to necessities like groceries, rent and bills; 30% of your income goes to fun items; and 20% goes into a savings account.
Use cash instead of cards. Take out the amount of cash you want to allow yourself for a given period of time. When the money runs out, you are done spending until the next period. When swiping a card, you aren’t seeing the actually exchange of money so may not realize just how much you are spending on different items.
Set goals. When you overspend, you are likely not thinking about the long-term affects of your spending. Set some short-term goals that are easily attainable to get yourself motivated to change your habits. Some ideas are: save 15% or more of your paycheck into a separate account; bring lunch to work every day for a week instead of going out; use only cash for two weeks. Though small, these things can start to shift how you use your money.
Put things in context. When you are considering a purchase, think about the amount it costs in another context. If you want to buy a $1,000 computer and make $20 an hour, that computer costs you 50 hours of work, before taxes. That money could be used to start a retirement fund or for more necessary items (unless of course you need a computer for work, school, etc.). Really think about the value of the money before dishing it out on things you don’t need.
Give yourself a reward. If you set too strict of standards, the temptation to break them is higher. Give yourself a small reward every so often. Allow yourself to splurge just a bit once a month on something you like so you don’t end up blowing all your money in one shopping trip/vacation/night out.
Courtesy of Money Crashers
http://www.moneycrashers.com/stop-overspending-budget-control/
