Spending money can be fun, especially if it’s on something you want. This is how people get into trouble from spending too much.
You can spend too much whether you have a low income or high income. The spendthrifts of the world know no income restraints.
A spendthrift is someone who spends way more than they make. They buy everything or do anything. If you find yourself spending all your money and not using any or all of the items you purchase, you may be a spendthrift.
Don’t fear though, you can become a thrifty person. When we say thrifty, we mean someone who purchases quality items within their budget and sometimes for a good deal.
Here are five steps to take from spending outrageously to spending smartly.
Track Your Spending
List out your bills and receipts versus income. This is the first step to any financial stability.
If you don’t know what you are spending you don’t know where to cut back on. After you have the month’s expenses listed compare that to your income. If you spent more than you made then you have a problem.
Define Your Money Goals
You know you don’t want to continue spending as much as you do, but you don’t want to give up your current life style. Setting a financial goal will help with that.
Where do you want to see yourself long term? Is it taking overseas vacations every year? Is it getting out of debt or is it simply saving for retirement? Creating reachable goals will help you become thrifty.
Create a Budget
Once you have your goals in place you can create your budget. Budgets can be tricky but for the first couple months you can make sure you don’t spend more than you make.
Once this has been achieved, then set up a budget to start saving or putting money aside or paying debt. It’s hard to change habits and even harder to change spending patterns. So, it’s ok to start small!
Get Your Loved Ones on Board
The people you surround yourself with greatly influence your habits. If your friends or family don’t understand or support your decision to only go out once a week or pressure you to continue in your habits, you probably shouldn’t hang around them as often. It’s hard but you’ll feel better when you can afford to do things and they can’t.
Review Your Finances Weekly
This is extremely important as you first start out. Knowing how much money you have spent and how much is in the bank is important. As your habits change and your goals are met, you can move it to once a month. Make your money work for you.
Cutting back on spending is hard, especially when you are used to spending what you want on multiple credit cards and don’t look at your bank statement.
You can change your spending habits, but it won’t be done it a day. There will be times where you relapse and splurge. Every now and then it’s okay, but don’t get back into the habit of it.
Sticking with these five steps will help you become thriftier and honestly a happier person.
Are you a spendthrift? What steps did you take to change from a spendthrift to thrifty?
Photo courtesy of: webandi