Rent and utilities. Depending on your living situation, you may be splitting these expenses with a roommate or a partner. [3] X Expert Source Trent Larsen, CFP®Certified Financial Planner Expert Interview. 22 July 2020. Your landlord may also pay for your heat, or you may pay for your electricity every month. Transportation. Are you walking to work every day? Biking? Taking the bus? Carpooling? Food. Factor the average amount per a week for meals for the month. Health care. It is important you have health insurance in the event of an incident or accident, as paying out of pocket will likely be more expensive than being covered. Do some research online to find the best insurance rates. Miscellaneous expenses. If you have a pet, this could be where you determine how much pet food will be for the month. If you and your partner go for a date night once a month, factor this in as an expense. Account for every expense you can think of so you do not spend money without knowing exactly where it is going. If you have any debt payments, add these to your budget under necessary expenses.
When food shopping, look at recipes beforehand and make a grocery list. This way, when you are in the store, you can stick to the list and know exactly how you are going to use every ingredient you buy. If you have a hard time sticking to a grocery list, try online grocery shopping. This will allow you to keep a running total of your purchases and be aware of exactly what you are spending. [5] X Research source
If the answer is no to these questions, it may be best to leave the item in the store and save your money on an item you need, rather than want, even if its on sale.
If you do end up taking your credit card with you, treat it like a debit card. This way, every cent you spend on your credit card feels like money will have to pay back every month. Treating your credit card like a debit card means you won’t be so hasty to whip it out for every purchase.
Bring your lunch to work every day, rather than shell out money for lunch. Take 10 minutes at night before bed or in the morning before work to make a sandwich and a snack. You will notice you save quite a bit of money every week by just bringing your lunch. Eat out sensibly. There is nothing wrong with buying lunch once in a while. But be aware of choices that are good deals. Check for lunch specials. Look for coupons. Try buying lunch at the grocery store rather than the chic cafe.
This will help you determine what you consider a necessity and what you consider a nice to have. Beyond the obvious necessities like rent and food, you may reason that a gym membership is a need because it keeps you fit and feeling good. Or a weekly massage to help with your bad back. As long as these needs fit within your budget and you can afford them, you can spend money on them.
Websites like Pinterest, ispydiy,[13] X Research source and A Beautiful Mess[14] X Research source all have great DIY ideas for household items. You can also learn how to recycle items you already own and make something new with them, rather than spend money on a new item. Try doing household chores and activities yourself. Shovel your walkway yourself, instead of paying someone else to do it. Get the whole family involved in outdoor chores, like mowing the lawn or cleaning the pool. Make your own household cleaning items and beauty products. Most of these products are made of basic items you can buy at your local grocery store or health food store. Laundry detergent, all purpose cleaner, and even soap can all be made by hand, by you, for cheaper than store prices. [15] X Research source
Ask yourself: Am I spending too much money on these discretionary expenses? Are you finding it difficult to pay bills because of going on vacation, for instance? Or do you really need the designer shoes or the latest gaming system? Check for things you do not use. [19] X Expert Source Benjamin PackardFinancial Advisor Expert Interview. 11 March 2020. This may mean a gaming site subscription you have not used in months, or a gym you do not go to, or cancelling cable because you watch everything online. There are admittedly a few grey areas, such as a gym membership or a nice wardrobe that may be necessary for your professional career. These may not need cutting, but worth scrutinizing.
You may be surprised by how much you end up spending in just one week or in one month. If possible, look at data compiled over the course of a year. Most financial planners would review entire year of expenditures before making recommendations. Discretionary expenses can end up taking up a large percentage of your pay cheque or allowance. Recording them will give you a sense of where you can cut back on your spending. Take note of how much you spend on wants versus needs (for example, drinks at a bar versus groceries for the week). Figure out what percentage of your expenses are fixed versus discretionary. Fixed expenses remain the same each month, while discretionary expenses are malleable.
Try to use less cash and instead use your credit or debit card, which can be tracked. Credit card balances should be paid in full each month if possible.
Ask yourself: Do I spend more than I earn? If you are dipping into your savings to pay for your rent every month or using your credit card to pay for shopping sprees every month, you are spending more than you earn. This can only lead to greater debt and less savings. So, be honest about your spending every month and make sure you only spend as much as you earn. This means factoring in money every month for expenses and savings. [22] X Expert Source Trent Larsen, CFP®Certified Financial Planner Expert Interview. 22 July 2020. You can also use budget apps to help track your spending on a day-to-day basis. Download a budget app to your phone and record your purchases right after you make them. [23] X Research source
Compulsive shopping usually affects women more than men. Women with compulsive shopping issues usually have racks of clothing with the tags still on them. They will go to the mall with the intention of buying just one item and come home with bags of clothing. Compulsive shopping can be a seasonal balm for depression, anxiety, and loneliness during the holiday season. It can also occur when a person feels depressed, lonely and angry.
Do you get a certain rush when you go shopping and buying things you don’t need? You may feel a certain “high” when buying many things on a weekly basis. Notice if you have large amounts of debt on your credit card or multiple credit cards. You may also hide your purchases from concerned family members or partners. Or you may try to cover up your spending by taking on a part-time job to supplement your spending habits. Individuals who have a compulsive spending problem will likely be in denial and have a hard time admitting they have a problem.
During therapy, you may identify the underlying issues behind your compulsive spending and acknowledge the dangers of over spending. Therapy can also offer healthy alternative ways to cope with your emotional issues.
