5 Ways to Kick Bad Spending Habits This Year
It’s that time of the year again: prime planning season. Everyone’s got their goals and resolutions that are not likely to be fulfilled. I know. It’s depressing, but the reality is that only 8% of people who make New Year’s resolutions actually achieve their goals.
One of the major goals that people set for their new year involves personal finance. In January of 2019, saving more and spending less was the fourth most popular New Year’s resolution behind losing weight, exercising more, and eating healthier. This tells us that our money management is something we wish to, but often fail to address.
In 2020, let’s actually spend less and achieve the financial goals we set for ourselves. Here are 5 ways to make it happen.
Start with Why
Before the “what,” which is spending less and the “how,” which is following through on smart financial strategies, we must address the “why” behind our actions. Simon Sinek, renowned speaker and author of “Start with Why” states,
“What the why does is it provides a path. It provides a map or a compass. So you will still have some of those amazing experiences but now they have value and worth and they’re taking you towards something else. It’s a journey towards something.”
What are you striving towards? Is it financial freedom? Generational wealth? Security? Independence? All of these “why’s” run deeper than simply wanting to manage your spending. Focusing on the deeper purpose behind your desire to create good spending habits will help you move with conviction and reach your goals.
Plan. Plan. Plan.
My pastor frequently mentions the beginning of Proverbs 29:18: “Without a vision, the people perish.” In this context, if you don’t have a plan, you will end up making easily avoidable mistakes and wandering down the road to financial ruin.
It is critical to put a budgetary plan in place to define exactly where you want your money to go and how much money you want to spend. In this highly informative article on financial planning, writer Stephanie Bolling outlines five budgeting methods you can utilize depending on your level of income, spending habits, and general financial priorities. If some of the methods with exact percentage goals for your income like the 50/20/30 method seem too rigid for your taste, consider a flexible, month-to-month approach that simply organizes spending based on your priorities like the Pay Yourself First method.
Take Some of the Power Out of Your Hands
The amount of damage you can do to your bank account is contingent upon how much money is in the account. If you have difficulty controlling spending, take some of the spending power out of your hands, save, and pay off your bills using automation.
Automation allows various savings, credit, and bill accounts to take money out of your account without you ever being able to see it. Therefore, you’ll never be at risk of spending too much to save and cover your monthly expenses. I currently have automatic payments going to my phone and phone service companies Affirm and Visible, respectively.
Spend Money to Make Money
In the new year, aim to get some type of reward or credit back for your purchases. Many of your favorite brands like Starbucks, Disney, Staples, JCPenney, Subway, CVS, and Regal have rewards programs that help you earn points towards free or discounted food, clothes, merchandise, and movie tickets.
As somewhat of a Dunkin Donuts addict, I use the DD Perks rewards card when I buy coffee or pastries in order to work my way up to a free beverage. I have had many free large caramel lattes as a result of this program. You can experience the same rewards by signing up for the rewards program of your choice!
Execute
All that’s left is to execute on the plan you created, making sure to keep your “why” in mind. In a session with athletes, top motivational speaker Dr. Eric Thomas asked, “You can’t bless your why if you don’t do what?” His audience responded, “Execute.”
You have the power to manage your spending well in 2020 by following the tips in this article and in other financial resources. By understanding your root desire and taking practical steps each day to follow through on your plan to fulfill it, you can become a healthy spender, living the life you want to live.
