Monitoring Budget Spending
A budget can be planned perfectly down to the last nickel, but it requires a positive attitude and careful monitoring to work. You may not want to be on a budget (who does?) and thinking that way can lead you to seek out small rewards for sticking to something you don't want to do. The mentality of the spender is just as critical to successfully reaching personal finance goals as the structure of the spending plan. Stay positive! Keep thinking about being debt-free or the other goals you have set.
Here are a few ways to improve your spending mindset, and ultimately help make sticking to your budget easier.
Use Cash.
You will spend less money without a credit card. Because the use of a credit card does not immediately impact our power to buy, we are significantly more likely to buy more. For example, if you had $20 to last an evening and you had already spent $15, with cash, you would be strictly limited to the remaining $5 bill in your pocket. You would have to be very careful in how you choose to spend that $5, because once it's gone, it's gone.
On the contrary, if you had set yourself a $20 limit but were paying with credit, you wouldn't feel as restricted and would be much more likely to buy more. As people, we don't like feeling restricted, and so we tend to liberate ourselves in small ways. And even though the cake is delicious, those are extra dollars are ultimately not being put towards our goals.
A common way of taking advantage of the psychological restriction of cash is the envelope method. By diving out the weeks' allotment of cash into envelopes, you not only anticipate how much you will have to spend. But you will begin to plan ahead to stay within that limit so you don't find yourself going without.
Go to your home ATM.
Banks charge hefty foreign ATM fees. While $2 may not seem like very much, consider how many times a week you may be hit with that $2. If you use a large amount of cash, you could be losing $10 a week or more to service costs. That could be more than the gas it would take to drive to the closest home ATM.
Count to Ten.
Never shop in a hurry and never go to the grocery hungry. Before you put anything in your cart, take ten seconds. Ask yourself:
- Do you really need it?
- Is it essential or a luxury? Realistically, can you live without it?
- If it is an essential item, is there a generic or less expensive alternative?
If so, investigate the alternative and see if it's reasonable to incorporate the cheaper alternative into your life. Do this for enough products, and you'll see a substantial savings.
Look at Everything Separately.
Have you ever made a purchase, and then added an accessory without looking at the price tag? By doing this, you're blindly racking up a hefty total that will only hurt you later. Keep focused on your spending, and don't try to rationalize reckless additional purchases.
Free Money.
Free or "found" money such as tax refunds and bonuses tend to leave our wallets sooner than money we worked long and hard for. In fact, some people will consider tax refunds to be money exempt from the rules of a spending plan. In fact, that money is even better for your plan because it serves as a rewarding boost to your savings. Bank those funds if you can and watch your savings grow.
