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Budgeting Part V: Tips for cleaning up your spending habits

piggybank_360.pngLiving within your means is one of the keys to financial success, but are your spending habits preventing you from reaching your goals? We’ve been sharing tips for creating a healthy household budget these last couple of weeks and today we’ll focus on ways to clean up those money habits to keep your budget on track. You don’t have to be a reckless spender to do some serious financial damage — sometimes it’s those little everyday habits, like out-of-network ATM withdrawals, last-minute purchases, and buying items in bulk that you never use, that end up costing you more than you realize. Here are some things you can do to clean up your spending habits:

  1. Always (always) shop with a list Taking that small step to write down exactly what you plan to buy on your next shopping trip can make you more mindful about your purchasing decisions — and ward off a spending spree. Avoid impulse buys and sale items that catch your eye so that you aren’t spending more than planned. Whether you use a notepad app on your smartphone or do things the old-fashioned way with pen and paper, just make sure you have some shopping guidelines by your side on every shopping trip.
  2. Shop around Resist the urge to buy something on impulse when you’re shopping at a store and stay clear of all types of flash sales online. The urge to splurge will pass if you take some time to broaden your purchasing options. Get into the habit of comparison shopping online to find the lowest prices in your area or lower-cost alternatives. Shopping apps like PriceGrabber make it easy to compare prices on a product just by scanning the barcode. RetailMeNot is a popular coupon site and shopping app for finding current discounts and coupon codes for hundreds of popular retailers.
  3. Know your triggers Do you tend to spend more when you’re stressed, angry, or bored? If you are an emotional spender, it can be even more challenging to keep your budget in the green zone. Identify your spending triggers and recognize an oncoming shopping spree before it starts. Some introspection can help you get a better handle on your finances and ward off a financial disaster.
  4. Break the credit card habit If you tend to turn to credit cards to cover monthly bills or just have a habit of charging everyday purchases to your credit card, take a break for at least three weeks — the time it takes to make or break a habit. Spending money you don’t have via credit cards can perpetuate an unhealthy cycle and make it very difficult to get a handle on your budget. Take steps to eliminate credit card spending so that you can operate on a cash-only basis.
  5. Take stock of unnecessary recurring expenses Take a closer look at any recurring fees you’re paying for membership and subscriptions each month. Do you really need that newspaper delivery subscription when you can read articles for free online? Is that gym membership you paid for — with good intentions, of course — at the beginning of the year actually being used regularly? Authorize a cancellation for memberships and subscriptions you aren’t using anymore and make sure to account for any cancellation fees and charges.

Making changes to live within your means will not only ward off credit problems but can also help you make better purchasing decisions. Stay tuned for the next post in this series where we’ll talk about smart ways to set budget goals and keep your budget on track.