Good spending habits.

The ability to stick to a budget is greatly enhanced when you are mindful of how you use your money. But being mindful all the time can be tiring … constantly thinking and questioning whether you are doing the right thing. That’s where it can be helpful to get into some good spending habits so that the right thing happens without you even thinking about it.

A really useful habit to get into is … Don’t spend more than you earn! Sounds obvious, right? But it’s amazing how easy it is to do … especially with access to things like credit cards or buy now pay later schemes. So, how do we avoid it? By planning well, being aware of your money, and using good spending habits.

The best way to avoid spending more than you earn is to have a plan for your money. Don’t fly by the seat of your pants hoping it will work itself out … it’s too important. Some people call this budgeting but I think a more positive spin is to think about it as a plan for getting the things you want out of life.

Another good habit is to be really clear about what we need and what we want. Much of our spending isn’t really necessary. How often do you really think about whether you need the item you’re buying or whether you simply want it? Now, I’m not saying don’t buy the things you want, but do make an informed choice. Ask yourself “If I buy this thing that I want now, what might I miss out on in the future?”

Another tip, when tempted to buy a ‘want’, is to think about it in terms of how many hours you need to work to pay for it. Sometimes that new gadget or new pair of boots isn’t worth the 3 or 4 hours of your time … especially if you need to work another 3 or 4 hours to make up for the savings you’ve used … or if you have to wait longer for your savings to accumulate so you can have the other thing you were saving for.

A major disruptor of carefully laid money plans is impulse buying. And a lot of impulse buying is emotional spending. This is simply where you let your emotions override your careful plans. If you are tempted to make an emotional purchase, ask yourself “Is it really going to make me feel better in the long run? Will it affect the goals I’m looking to achieve?” If you can defer the purchase for a few days or even a few hours the urge often goes away,

and you’ll feel better for having not broken the budget. Credit cards are great, aren’t they? They make it so easy to get the things that we want … but they also make it really easy to get into debt that we don’t really want. Remember each purchase you make using your credit card will potentially cost you more. Aim to use an interest-free period and clear the card in full each month. If you are going to use your card for larger purchases that you won’t pay off within the month, look for

a card with a lower rate and be disciplined to pay it off as soon as possible. It’s also important to understand the real value of what it is that you are buying. Some of those “great deals” you see advertised - if you break them down - sometimes don’t stack up at all. Why pay for unlimited access if you actually only use a small amount of data? Look for unit pricing in the supermarket to accurately compare different products. Some people like to make savings by buying in bulk however

if you can’t use all the product before it expires, are you actually getting value for your money? So, do your research and look for the real value with your purchases. Our final good spending habits for you is to plug the money leaks. What are money leaks? They’re those little regular expenses for ‘nice to haves’ that add up and can quickly get away with our hard-earned cash without us realising. Did you know that your $4 daily coffee can add up to $20 a week, which is $80 a month,

which is $960 a year?! Now, you might still choose to have your daily coffee or you might decide you’d prefer an overseas holiday … but think about all the little money leaks you may have that could mean you’re not achieving your financial goals … and make the choice to plug them. So there you have 8 great spending habits to start working on … but don’t bite off more than you can chew. Try starting with plugging the money leaks and go from there.

Continue your Financial Fitness journey with the next module from the online course.