January 7

How to Break Bad Spending Habits

Posted by on January 7, 2014 at 8:00 PM

How to Break Bad Spending Habits

Everyone has one or two bad spending habits, but since it’s a new year there’s no better time than the present to resolve to break them (and actually break them!). There is no excuse for overspending or getting into debt when there are so many easy to implement solutions out there. This 2014, say goodbye to your bad spending habits and say hello to a financially responsible you!

1. Bad habit: Abusing your credit cards / Solution: Live off cash only

If you’ve ever watched Gail Vaz-Oxlade’s show Til Debt Do Us Part, then you’ll know the first thing she makes couples do who abuse their credit cards is to make them live off cash only. It’s a great exercise to wean yourself off credit and become more comfortable living within your means. That being said, living off cash alone won’t get rid you of your dependency on credit, leading me to #2…

2. Bad habit: Spending and forgetting / Solution: Recording all of your spending

If you can’t remember how much you’ve spent on something then you’ve probably been overspending. The only way to really take control of your finances is to keep track of every single purchase. Personally, I try to make all my purchases on debit or credit to keep track of everything, however if you don’t trust yourself with either of those cards and choose to only spend with cash, make sure to get a receipt for everything and write it down in a notebook or an excel spreadsheet. This way you can see what you’re spending too much on, which will help when you make yourself a budget to stick to.

3. Bad habit: Always going over budget / Solution: Make a more realistic budget

Creating a budget is a great idea, but sometimes the numbers in your budget just aren’t realistic. In a perfect world you could spend $10 a month on eating out and be totally fine with it. In the real world $50 may be a more realistic number (unless you only want to order an appetizer at dinner). The best mindset to have when creating a budget is to set yourself up for success, not failure. This may mean trying out a few different budgets until you find one that just works. Then, once you’ve become comfortable with that budget, that’s when you can try to adjust it to cut out expenses and put more into savings.

4. Bad habit: Not put aside money for savings / Solution: Set up an automatic savings plan

For the past 3 years I’ve been happily putting money into my savings and investments accounts with hardly any effort. Nowadays you can easily set up automatic transfers from one account to another, helping you reach your savings goals without the worry. What I’ve done is set up transfers from my main chequing account to my high-interest savings account (my emergency account), my TFSA (my long-term savings account), and my RRSP (my investment account) every paycheque so once I get paid I automatically pay myself first without giving it a second thought.

Bargainmoosers, what bad spending habits do you want to break this year?

(Image credit: x.Jason.Rogersx)

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