Summer is here, and with it comes daydreams about where to go on vacations and nightmares about how to pay for it. That conflict happens to everyone, which is why it is so important to investigate how we spend money. Moreover, we need to examine our spending habits.
Do you ever “boring shop” or fill a shopping cart online because you have nothing else to do? What about buying some new clothes before you pay your bills? We all do it; yet, none of us should. Those are examples of bad spending habits. If you haven’t been encouraged to do so, take a moment to look at your finances and determine where you can make changes, so you don’t have to cancel the summer festivities because of a bounced check.
Here are the top five spending habits you need to change for this summer:
1. Impulse Buying
Do you know those fantastic images that pop out on your social media timeline? What about the stack of “just in case” items you see on the endcap as you prepare to check out? Ever been suckered…eh, tempted to purchase something that’s 10% off? Retailers are onto your bad spending habits, so they create these triggers. So, how do you prevent impulse buy?
The easiest way is to train yourself to put things in a cart and let them sit there for 24 hours. Then, typically, when you come back, the buzz from any impulse is gone, and you will consider if you “really need” that purchase with a clear head…and a full pocketbook.
2. Ignorant Spending Habits
The word “ignorant” means “lacking knowledge.” Most people don’t spend because they don’t understand what they are purchasing; they don’t know why they shouldn’t. Spending money that doesn’t matter leaves less money in your piggy bank to eliminate expenditures that do matter, such as credit card debt or student loans.
A healthy budget creates a happy lifestyle. If all you use for your expenses are a card, you may lose track of what you’re spending. Use cash for all the extra stuff, and you may be surprised how fast it goes and where in the world it went.
3. Inconsistent Savings
There’s never an umbrella around when you need one. That “rainy day” money is usually the last priority many make in their finances when it should be the first. That is usually why many of our clients come to us in the first place. An emergency happened that throws personal finances in a tailspin.
A flat tire? Behind on rent? Overdrawn account? Unforeseen medical issues? These personal emergencies happen, and usually when you least expect them. That’s the thing about a crisis—there never is one if you have enough money in the bank to cover it.
4. Inept Budgeting
Many people who get themselves into dire financial straits usually spend until the bank says they can’t any longer. Try this: Make two lists of everything you spend. One list will itemize all your “necessary” expenses, such as groceries, utilities, shelter, and insurance. The other will full of your “discretionary” expenses, like entertainment or going out to eat.
Now, subtract both from your monthly income. Do you have anything left over? That’s positive cash flow. If you don’t have anything left on paper, you’re spending more than you make, which should stop immediately. Negative cash flow will never help you get to summer vacation.
5. Idle Planning
January 1 gets here, and you swear that this year will be different. You join a health club with an annual membership. You used a stimulus check to buy one of those at-home exercise bikes that cost every month. And then, come March or April, you have other things to do. The problem is that you are still spending all that money, and you don’t even realize it.
How many apps do you need to stream? How many shows do you need to binge? Signing up for free trials isn’t a good idea when you forget you opted into automatic spending when the test is over. Check your bank statements for those pesky subscription fees. Check your spam for unsolicited advertisements. Whatever tempts you into buying what you don’t need, plan to get rid of it.