When a person is trying to develop healthier habits, recognizing what to do and routinely following through aren’t always the same thing. Figuring out how to stop spending money is no different.
An individual might know that cutting out non-essential expenses can help grow savings. But, many Americans admit they still have trouble setting and sticking to a budget.
Abstractly grasping the importance of something doesn’t necessarily make for a fuller wallet at the end of the month. Some studies show that American adults spend nearly $1,500 per month on things and services they don’t even need, such as buying food from restaurants or shopping online.
On top of that, according to the Federal Reserve , nearly 40% of Americans couldn’t cover an unexpected expense of $400 out of savings alone.
For many individuals, knowing they could be spending less isn’t synonymous with understanding how to stop spending money.
Nearly one in three American workers run out of money before their next payday. And, sticking to a budget is a problem that affects all income brackets—including individuals who make $100,000 or more a year.
Thankfully, there are plenty of strategies that, when regularly adopted, can develop healthier spending habits. Here are six approaches that might help an individual identify how to stop spending money:
Ways to Curb Spending
1. Mapping Out a Budget
When spending money, mindfulness can make an impact. Many individuals do not track spending and, so, aren’t aware where all their money ends up going. Before a person can stop spending money, they may want to map their present spending patterns and essential expenses.
Once these are grasped, a person might begin to sniff out places where spending could be pared down.
A budget is a spending roadmap that can help individuals both to plan and then keep track of their most common expenses. But, according to some studies, only two in five Americans use a budget to guide how they spend.
A budget can be an important tool for those hoping to stop spending money. A personal budget, for instance, can help individuals pay closer attention to their cash flow—noticing how much money comes in and where those dollars then get spent. Essentially, a budget is a spending plan that outlines incoming money vs. outgoing funds.
Before mapping out a precise budget, individuals may want to examine their current spending habits. One good place to start is with monthly bank statements or receipts from recent purchases. It could then be helpful to identify essential from non-essential expenses.
Necessary spending might include items, such as housing/rent, groceries, utilities, healthcare costs, and transportation. Non-essential costs, instead, may span items like eating out, leisure travel, and entertainment.
It might sound obvious to state that big-ticket nonessential items, like a pricey vacation or brand new gadget, can drain one’s cash reserves. But, small daily purchases—eating out for lunch every work day, to name just one—can also add up to a much larger spend over the course of each month.
Budgets can serve as financial goalposts or guard rails, encouraging individuals to hold their spending accountable to an already sketched-out plan (not just the whims of the moment).
Once a person figures out how much they tend to spend in each expense category, it may be easier to identify places where they could cut back. A monthly budget can allot specific amounts of money for vital expenditures, savings, investing for retirement, or fun activities
For example, an individual might opt to allot $300 a month to nonessential online shopping. In that case, the person could strive to stop spending money online once the budgeted $300 has been used up. Setting a budget may even help some people to change spending habits.
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2. Calculating Hourly Earnings
A night out on the town may not seem like a huge splurge in the moment—especially when compared to one’s total earnings for the month. But, that same expense can quickly appear more significant, when a person tabulates how many hours of work are needed to pay for it.
A birthday dinner and drinks with friends that costs $200 would translate to eight hours of work—assuming the person earns $25 per hour. It would take even more hours, if the person makes less per hour.
Whether that spend feels worth it is a personal decision, but determining how much one earns per hour (even if salaried) can provide psychological incentives to stop spending.
So, how can a person figure out their hourly pay? It’s possible to divide after-tax pay by the number of hours worked. If someone gets paid twice a month and works a 40-hour week, they would divide those total earnings by 80 (two weeks times 40 hours).
With that number in mind, an individual can evaluate expenses and whether the hours needed to cover that cost are worth the labor.
While some expenditures will feel worth it, others likely will not.
3. Understanding What Triggers Spending
Whether it’s the prepared food section at the grocery store, the Instagram influencer with the covetable closet of clothes, or that friend who drops big bucks on concert tickets, the human urge to spend can be triggered by emotions.
Shopping sprees, after all, can be motivated by more than marketing. Sometimes, people shop to feel better after a tough day.
Even something as seemingly innocuous as the physical shopping environment—think in-store displays, prominent markdown messaging, and subtler cues like store layout—can trigger people to want to spend. When figuring out how to stop spending money, it can be key to understand which emotional or psychological cues make someone want to spend.
There are a couple ways that getting a grasp on one’s spending triggers may help. For starters, individuals might plan ahead to avoid scenarios that make them more prone to spend. And, when that urge to shell out cash strikes, individuals can then evaluate whether the purchase is really necessary or mainly feels good.
4. Shopping with a Plan
It’s not always easy to avoid spending triggers, especially when they’re tied to a needed expense—like, food shopping or transportation costs.
Still, it may be easier to avoid the temptation to spend by creating a shopping list and sticking to it.
For example, going grocery shopping may be easiest to do right after work. But, that time of day may also coincide with when someone’s at their hungriest. Hungry shoppers, research shows, tend to buy more non-essential items.
Creating a limited list of items to pick up can help shoppers to focus on what they really need—rather than buying out of mere want or tummy grumbles. Some individuals prefer to order groceries online, eliminating altogether the temptation that in-person grocery displays can stir up.
5. Sleeping on It
If purchase regret wasn’t a problem for so many, the decluttering expert Marie Kondo would not have an estimated net worth of $8 million dollars. The buyer’s remorse is real.
According to one U.K. study , nearly one-third of clothing purchases go unworn, and 18% of food and drink goes to waste. With this in mind, here’s one way to cut expenditures: stop spending money on stuff that’s not truly needed.
Taking time to mull over purchase can be beneficial. With more time to weigh the pros and cons of a spend, an individual can coolly evaluate whether they might treasure the item months down the line or ignore it once the shopping impulse fades.
There’s no set-in-stone time to wait, with some advocating a week to 30 days of wait time for major purchases.
It’s not always easy to cleave actual needs from the fleeting thrill of shopping. Studies show that activities that provide instant gratification, such as impulse shopping, activate feel-good chemicals in the brain. But, if that purchase comes at the expense of a person’s long-term goal to save, buying now could feed deeper regrets later on.
“Sleeping on it” for a few hours (or even days) may reduce the immediate influence of emotion, providing some necessary psychological distance from the initial hunger to buy.
For example, waiting may cause a person to realize that the new pair of jeans could quickly lose its novelty after a few washes.
6. Finding It Cheaper
Of course, it’s not possible or reasonable to expect that anyone would eliminate all non-essential expenses. There are times when individuals may still choose to spend money on a specific purchase. And, once someone’s decided to buy a given item, they may want to price shop to save.
Comparison shopping is a good tactic for reducing spending. A buyer could price out the same offerings at different stores or sites.
Alternately, they might compare similar brands of comparable products, deciding whether the difference in price is justified (or not). It may be possible to find the same (or equivalent) product being sold for less.
It can also be a good idea to keep an eye out for discounted pricing. Certain times of the year, such as the holidays or back-to-school season, can bring with them deep sales. Holding off on a bigger purchase until then may lead to additional savings.
When shopping online, some buyers like to search for promo codes to trim what they’ll shell out. Public online marketplaces, such as Craigslist or Nextdoor, often list gently used items (and sometimes new ones) being sold at a significant discount.
Stopping Spending Money Starts with Awareness
Naturally, it’s not possible (or desirable) for people to stop spending money altogether. Still, individuals can adopt habits that may help them shrink superfluous spending.
No matter which strategy fits a person’s financial goals, it can be hard to alter spending habits without having a central place to keep track of income and expenses.
The SoFi Checking and Savings® app comes with an easy-to-use dashboard, where members can view exactly how their money is spent. A checking and savings account with SoFi comes with built-in budgeting tools, too—rewarding users when they save and spend.
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