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How do your savings habits stack up? Most of us could probably take a closer look at our budget to find extra opportunities for frugality. It’s easy to fritter away money on small, inconsequential purchases and not have enough left over for the things that count, like a family holiday or a deposit for a house. If you feel like you need to trim the fat, we have a few tips to help you:
No More Credit
We’re fast becoming a cashless society, and the tap-and-pay culture makes it easier than ever to spend money. This practice can often lead to overspending because your bank balance seems quite removed from the ease of payment.
Having a credit card can be even more of a recipe for disaster, as it’s so easy to rack up thousands of dollars of debt that you can’t afford to repay. Cutting your credit card out of your life is a significant step towards financial stability and building savings. If you do need some extra cash to tide you over in a time of need, small loans with low interest rates can help you bridge the gap without getting into a cycle of debt.
Shops are specifically designed to get people to spend money. Your local supermarket puts the bread and milk near the back so you have to walk through the whole shop to pick up a few basics. Clothing stores use the same technique, placing best-selling full priced items at the front of the store and sales racks at the rear. They also merchandise outfits in complementary sets, keep minimal stock on-floor so you worry you’ll miss out, and up-sell and cross-sell to encourage you to buy more.
With all of these clever tactics at play, browsing can quickly lead to buying things we don’t need. The easiest way to prevent this is to stop browsing. Go to the supermarket with a strict list of items that you need and avoid clothing stores (and online shopping!) altogether.
Avoid Psychological Shopping Traps
Research has shown that people often use shopping as an emotional outlet. It can be used as a way to cheer themselves up, celebrate a happy occasion, or even to temporarily escape from negative feelings. If you know that you fall into these psychological spending traps, try finding a substitute activity that gives you the same positive emotional response. Next time you feel compelled to spend, phone a close friend, go for a walk or watch a good movie instead.
Set Financial Goals
Take the time to set yourself a financial target and then establish realistic milestones to help you reach that end goal. You’re more likely to stick to a well-thought-out plan than a vague intention of saving money. If you have a partner or family, it’s essential to make sure that you’re all on the same financial page so you can work together to reach your goal.
Being unrealistic about your budget can lead to a spending blowout if the cuts that you make aren’t sustainable. To avoid a rollercoaster of spending highs and lows, predetermine a reward for when you reach a certain saving milestone. This reward might be a dinner out at your favorite restaurant each month, providing you have met your goal for that period. Having a small incentive to work towards can help motivate you when deciding whether you need that second iced caramel latte.
Changing your spending habits is no easy feat, but all your hard work will be worth it when you start to see your savings stack up. Time to tighten the belt!