Reining in Out of Control Spending
Ask your grandparents how they purchased their first home and you may be shocked to learn they spent years scraping together a down payment or even purchased it outright. Today, buying groceries using credit is quite common. Credit cards have made it easy to spend quickly and effortlessly, yet this can be one of the most challenging – and worrisome – of all financial trends. As a consumer, you know you want to spend less, especially on credit cards. Yet, with everything “a swipe away” it’s just too tempting to buy what you want whenever you want it.
You’re In Control
How can you pull in some control? How can you increase your ability to save and make better financial decisions? These tips put you in the driver’s seat.
#1: Only Carry Cash
This is the hardest, but most effective, solution you can use to reduce how much you spend on credit cards each day and month. When you use cash to purchase something, you actually watch as your money disappears. This instantly makes you think about every purchase or every item. You’ll quickly see a significant reduction in your spending not because you don’t have the money, but because you’re thinking more and smarter about each purchase.
#2: Use Only an Emergency Credit Card
If you feel too at risk without a credit card in your wallet, leave one. This should be used only in emergency situations. Keep the balance at zero by paying off the card any time you use it. Keep the rest of your credit cards stored safely at home.
#3: Wait 48 Hours
You want that new 4k UHD TV. You’re thinking that instead of fixing the washer you’ll just replace it. That new purse looks really cute. No matter what it is, if the purchase price is over, for example, $100, you need to wait 48 hours to make the decision to buy. This gives you time to think. It reduces the risk of spur of the moment shopping.
#4: Use an Envelope System
At the start of the month, create a budget for this month’s spending. Then, take actual cash and divide it into an envelope for each type of spending such as groceries or entertainment. Use only those funds for the month on the related expenses. Again, this system is effective because you will see your money disappearing with every purchase; causing you to hesitate and make smarter buying decisions.
#5: See Your Results
Sometimes, it is not just about limiting yourself, but actually seeing what you are achieving. When you stop spending so much on credit, you can start to see your savings account grow. It’s a good idea, for example, to wait the above referenced 48 hours prior to a purchase. Then, if you decide not to spend the $100 on an item, put that $100 you would have spent into your savings account. You’ll love seeing this account grow in value.
Having a budget is important, but so is making wise buying decisions. When you need to shop, stick to a list. Don’t make it the best part of your day, either. And, instead of swiping a credit card, feel that cold cash in your hand – that you’ve worked so hard to earn. Then, ask yourself if this purchase is really worth the work you put into earning those funds.
We’re Here to Help!
If you have questions on budgeting or need assistance getting the most out of your accounts, stop by any branch or give us a call at 800.782.4899.
Each individual’s financial situation is unique and readers are encouraged to contact the Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.