October 2, 2019
It may seem that the only way to save more money is to earn more money. But let’s face it: most of us could do more to control our spending habits. Don’t worry, this isn’t one of those articles that assert that millennials could all buy homes tomorrow if they stopped buying lattes and avocado toast. Rather, it’s a compilation of the ten common ways that many of us (millennials or not) overspend and tips to help you break these financial vices and spend smarter.
The Habits and Breaking Them For Good
Spending Habit 1: Spending Without a Budget
Setting up a budget can feel daunting for many Americans, and a big percentage (59%, according to CNN) of us don’t track our spending. A budget breaks down how much money is earned, how you plan to spend money, and actual purchases. This process can seem excessive, but many people forget to account for all expenses. A few dollars here and there can really add up over the course of a month.
Breaking the Habit: Take a budgeting baby step. Look at your average spending according to your online bank portal. Some financial institutions offer a graph to show you how you spend your money. From that information, give yourself goals for all major expenses – for example, $X for rent, $Y for groceries, $Z for transportation. For the first month, just see what happens – did you overspend or underspend? Keep a positive attitude regardless of what you discover. You are on your way to knowing where each dollar is going!
Spending Habit 2: Signing Up for Free Trial Subscriptions… And Never Unsubscribing
It can be tempting to sign up for a free trial of a television streaming service just to binge-watch a new show. But six months later, you may realize that you’ve been subscribed the whole time and forgot to cancel! In general, monthly subscriptions are sneaky. They make us think we are paying a small fee for something when really we are paying that price over and over, racking up the costs. This goes for all subscriptions, not just streaming services.
Breaking the Habit: Check your bank statements for monthly subscription fees and cancel everything that you don’t use. Make sure that whichever subscription services you keep are ones that you use consistently and find to be worth the expense. While you’re at it, unsubscribe from email newsletters that are just trying to make you buy something. Out of sight, out of mind.
Spending Habit 3: Grocery Shopping While Hungry or Unprepared
Grocery shopping here and there for things you haven’t planned to buy adds up. If you ever find yourself discarding untouched food, there’s a good chance that your grocery planning could be more detailed. This way, you don’t end up with too many or too few ingredients. Planning also helps you take advantage of sales and discounts.
Breaking the Habit: Take time to plan out the meals you will cook and how you’ll allocate leftovers every week. Purchase foods that can work and play together. For example, if you get a bag of tortillas, you can eat multiple meals as wraps: burritos, sandwich wraps, and tortilla pizza. You can often find ways to streamline when you plan.
Spending Habit 4: Accepting Late Fees
Sometimes, you don’t have money to pay and must accept late fees, but forgetting to pay bills on time should never be an option. Late fees don’t have to eat into your hard-earned cash when you learn how to plan.
Breaking the Habit: Schedule auto payments for fixed bills and subscriptions. Proper budgeting will lead to less over drafting and late fees. Putting your student loan repayment on autopay may also help you to lower your interest rate if your lender offers that benefit.
Spending Habit 5: Not Researching Big Purchases
When you’re contemplating a large purchase, such as a car or a new housing option, it can be tempting to throw your hands up and pick something quickly. Undervaluation of big purchases can lead to less satisfaction with your purchase and you may end up paying more than necessary.
Breaking the Habit: Unless it is an emergency, give yourself a week before settling on a big purchase. This will give you enough time to research the best options for your budget and financial goals. The best choice will stand out amongst the competition!
Spending Habit 6: Shopping as Therapy, Even Window Shopping!
In general, using shopping as a stress-reliever tends to be counterproductive. We buy things we wouldn’t otherwise buy, creating even more financial-based stress.
Breaking the Habit: Cultivate as many alternative stress relievers as you can! Take bubble baths, exercise, make a delicious meal, or watch a movie at home. There are alternatives to decrease stress without depleting your bank account.
Spending Habit 7: Purchasing to “Keep Up” With Your Friends
It’s often tempting to increase your social spending, whether it is to spruce up your house or to attend more happy hours. We have a tendency to assume that we should be able to afford the same lifestyle as our peers, but it’s important to remember that everyone has different financial situations and goals.
Breaking the Habit: You know your own limits, so take charge of how you spend socially. If happy hour is getting too pricey, invite friends over for BYOB drinks. When a friend buys something lavish and you are tempted to get it as well, reevaluate. Is it something you actually want, or do you just want to fit in? Better yet, is it something you could see yourself getting a lot of use out of? If the answer is no, perhaps you’d be better off saving your money and investing in something that makes you happier later on.
Spending Habit 8: Buying and Re-Buying Low-Quality Essentials
When strapped for cash, people often turn to the easiest and cheapest option. However, with items like shoes, furniture, or even linens, that isn’t always the best idea. For less than double the price, you can get higher-quality essentials that will last you for years. By contrast, many “fast fashion” clothing pieces and similar quality home products can wear out quickly.
Breaking the Habit: Practice waiting and saving to buy a higher quality version of the item. By going for the first bargain you find, you’ll often spend more money constantly replacing or repairing it. Streamline your purchases and buy multi-purpose items that can serve you well in many situations. For example, a good-quality, sharp set of knives that come with a knife sharpener can be used for years before they begin to wear out.
Spending Habit 9: Saying Premiums for Convenience When You Could Just Plan
When traveling or when very stressed, many of us accept exorbitant prices in order to get from point A to point B. Take-out food, bottled water, and travel essentials all have a mark-up that could be avoided by planning ahead and packing those items.
Breaking the Habit: Plan to have what you need at your fingertips. Stow reusable water bottles at work and in your car. Pack energy bars in your work bag. Do what you need to do to avoid those upcharges in airports, malls, and other convenient shopping spots.
Spending Habit 10: Spending More Than You Earn
This is the last, but most important habit to avoid. If you are stuck living paycheck to paycheck, budgeting will help you find areas to save. Even those with a high income have to budget to save.
Breaking the Habit: Be honest with yourself! This habit takes trial and error to break, but the most important step is to track your spending accurately so you can escape living paycheck-to-paycheck. You can do this!
Please note that the information provided on this website is provided on a general basis and may not apply to your own specific individual needs, goals, financial position, experience, etc. LendKey does not guarantee that the information provided on any third-party website that LendKey offers a hyperlink to is up-to-date and accurate at the time you access it, and LendKey does not guarantee that information provided on such external websites (and this website) is best-suited for your particular circumstances. Therefore, you may want to consult with an expert (financial adviser, school financial aid office, etc.) before making financial decisions that may be discussed on this website.
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