Back to school can be a drain on your bank account, especially after a summer of big spending. Once you get into the habit of overspending, it can become a slippery slope that’s difficult to climb off of. If you’re ready to reel things in and regain control of your finances, implement the following tips to help you stop spending and start saving.
1. Create a budget
You may get tired of hearing it, but if you want to be in control of your finances, a budget is a must. That’s because a budget gives you a plan for your spending so you can track where every dollar goes and ensure you’re not spending more than you’re making. Plus, it allows you to see areas where you might be spending too much, like on entertainment or clothing. Bottom line: you need a budget. Just do it!
2. Try the cash envelope system
How easy is it to swipe your credit or debit card without any thought given to the balance in your bank account? Cash, on the other hand, is tangible and can help prevent you from overspending. If you only have $50 cash at dinner, you’ll be forced to keep your tab under that amount. One way to do this is to use the cash envelope system. Using the amounts you set in your budget (see why you need that budget?), you can separate the right amount of cash into different envelopes and label them accordingly. The key is to not pull money from other categories. If you’ve maxed out your dining out cash, avoid the temptation to pull from your grocery or gas envelopes.
3. Eat out less
The truth is, most of us eat out far too often. Maybe it’s more convenient, or perhaps you just don’t like to cook. But dining out drains your wallet quickly, whereas cooking at home can be a big money-saver. Aim to eat out only two or three times a week. Make a meal plan at the beginning of the week to help you stick to your goal, and pack your lunches the night before work to avoid those last-minute fast food runs.
4. Budget your splurges
While you may not need the latest clothes or gadgets, if you have a problem with spending, you have to be realistic about the fact that you may be tempted to buy those things — even with a budget in place. Solution? Make room in your budget for the things you want. You may have to set some limitations, though. Accept the fact that you can’t have the newest of everything. Choose which items you know you won’t be able to resist, and plan for them (as long as you can afford your debts and bills, first). This will help you to not feel deprived of the things you enjoy while enabling you to stay within budget.
5. Prioritize what’s important
Ok, so budgeting your splurges is helpful, but are there other financial goals that you need to make a higher priority? Perhaps you want to get out of credit card debt or save money for a vacation. To do so, you need to be honest with yourself about what’s most important. If you have to choose between a night on the town or being able to save for that plane ticket to your sister’s wedding, which should you choose? Determine your financial priorities, and continually remind yourself why you’ve committed to them.
6. Automate savings
If you lack the willpower to save, automating it is your best bet. Out of sight, out of mind, right? Chances are, you have an online bank account that gives you access to online money management tools. So, utilize those tools to automate your savings. You can create rules to have money set aside each time you get paid or even each time you spend. This is a super easy way to build up a savings fund with essentially no effort. Win-win!
Changing your spending habits requires commitment and consistency, but once you’ve established these smart money practices and see how much they can benefit you, you’ll wish you’d have started sooner. So, don’t put it off any longer. Take charge of your finances and start saving today.