You keep telling yourself that you should stop spending as much as you do. You need to stop grabbing coffee from Starbucks every day. You should make lunch at home, or pass on that last round of after-work drinks. Whatever you might be telling yourself, it isn’t working. Your spending habits are still out of control.
How do you change this? We’ve got some ideas for you
1. Track Your Spending & Savings on Mint
In order to solve a problem, you first have to be aware of it. In the case of overspending, you need to understand just how much money you are throwing away, on a regular basis.
This involves keeping close tabs on your spending, and understanding exactly where your finances stand today. The easiest way to do this is to sign up for Mint. It is completely free, and available as an iPhone and Android app.
With Mint, you can keep an eye on all of your accounts (such as bank accounts, credit cards, car and mortgage payments, student loans, utilities and more), in one location. This helps you understand exactly how much you are spending.
Mint also breaks down spending by various categories, so you can understand just how much of your money is going towards rent, student loans, food, entertainment and more. This is the first step towards changing your money habits.
Mint also allows you to set goals, such as saving more, or spending less. You can recieve reminders and progress reports on these goals, to help you stay on track. Mint is a powerful tool for both understanding and controlling your spending.
2. Put Your Cards In a Drawer, & Spend Only in Cash For a Week
Sometimes, the biggest changes happen when we force ourselves to do things differently, by creating some sort of artificial pressure. This hack is a good example of that.
At the beginning of a week, using Mint, and your own judgment, you’ll figure how much you will allow yourself to spend during the next 7 days. This is outside of regular monthly expenditures like your mortgage, rental, auto loan or utility bill payments. Basically, you are going to be thinking about expenses like meals, groceries, transportation, online shopping, and of course, entertainment.
Figure out how much you are going to allow yourself to spend, and withdraw that amount from the bank in cash. Put that money in your wallet.
Remove all of your credit cards, as well as your debit card, from your wallet. Store those in a safe place. If you are planning on making a purchase online, you can use one of your cards, but make sure that such spending is planned beforehand. Don’t allow yourself to engage in impulse shopping.
For the next week, you will only spend using the cash you withdrew. You are going to force yourself to stay within these limits, and stick to the budget you created. At the end of the week, you’ll monitor your progress, and see how you did.
Repeat this again the following week, and the week after that, and so on. Over time, staying within a budget and spending more wisely becomes a habit, and you can probably put those credit and debit cards back in your wallet.
3. Create a Commitment By Signing Up for Stickk
Sometimes, despite our best efforts, we fall short of meeting our goals. Perhaps we get tired, and our willpower simply isn’t enough. Maybe we feel overwhelmed. Whatever the reasons, staying commited is hard.
For this reason, if your goal is to stop wasting money, you should consider signing up with Stickk. Stickk is a website and mobile app that helps you commit to goals, for a definite period of time. If you fail to reach a goal, Stickk deducts money from your bank account – you’ll link your Stickk account to your bank. This money might either go to charity, or to an anti-charity, or to a friend. You can either hold yourself accountable, or have someone else do it for you.
Psychological research has shown that humans have a fear of loss – in fact, we fear it more than the possibility of gaining anything. This is known as loss aversion – and you are going to use it to your advantage.
Suppose you commit to spend no more than $40 in the next week. You’ll enter this goal into Stickk, and enter an end date of one week from today. You will also decide how much money you lose if you don’t meet your goal. It could be as little as $1.
Additionally, you’ll select where the money goes, if you fall short of your target. You might choose to have it donated to a charity, or an anti-charity (a cause you don’t like, often based on your political views).
Lastly, you’ll need to decide how you’ll hold yourself accountable. Perhaps you want to only report to yourself, and can enforce accountability on your own.
However, for many of us, having a partner, another person whom you report to, and who monitors whether you met your goal, makes more sense. If you fall short of your goal, money will be deducted from your bank account, and given to the charity, anti-charity or friend you selected.
Stickk will allow you to really force yourself to keep your goals front and center, and to be very aware both when you succeed, as well as when you fall short. Loss aversion will push you to hold yourself accountable. You’ll learn how to avoid overspending – after all, doing so causes you to lose money.
4. Find an Accountability Partner
One of the most effective ways to change your behavior, is to find someone else to answer to. Humans are social creatures, and we are influenced by those around us. You want to find someone else, whom you trust, and whose opinion matters to you. You need to use your regard for that person, to help you pursue your goals.
Tell this person that you want to only spend a certain amount each week. You want them to help you maintain this goal, so you’ll ask them to check in with you at a specific time.
You’ll have to tell them whether you stuck to your goal, and if not, discuss why you were unable to do so. By sharing your experiences with someone you feel comfortable with and trust, you’ll be able to both gain better clarity around your goals, and also to understand why you might be falling short. In time, you’ll probably find that you are actually following your goals better than you might have otherwise.
5. Create a Journal For Your Goal
Writer and psychology doctoral candidate Benjamin Hardy argues that journaling is an effective means of gaining clarity around one’s life. Writing in a journal forces you to dig into your deepest thoughts, confront your fears, and become clear about what matters most to you. It helps you to understand what is really going on in your head, and why you act in certain ways.
You should consider journaling around your spending and financial habits. Write about how you spent in a given week, and why you did so. Ideally, you’ll pick a specific time each week for journaling, so that it happens consistently. Over time, you’ll start to see patterns in how you spend, and why you do so. This will help you figure out how to make changes to your spending habits.
The Final Word
It isn’t always easy to control our spending habits. It requires deliberate practice and effort. Yet, these efforts are absolutely worthwhile. As you save more and spend less, you’ll start to think differently about money, and find that you’ve got more set aside to save and invest. You’ll begin to learn what you really value, and what isn’t so important. This is how you change your behavior, and ultimately, write a new financial story.
