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4 Insightful Tips to Control Your Spending Habits

4 Insightful Tips to Control Your Spending Habits

Are you in debt? Are you always struggling to save money for the things you really want? Well, you’re not alone, many people all over the world are facing the same issues right now. No matter how hard they try, it’s never enough.

What’s curious is that even when they get a promotion (and earn more) and come across a big sum of money, they quickly return to the same situation. Why is that? The problem is not how much money you have, it’s your spending habits. It’s easy to think you’ll fix your problems by earning more money, but the truth is that you just have to spend wisely.

It’s easier said than done, I know, but if you’re reading this you’re willing to change and that’s the first step. I wish I could give you a quick, simple and easy solution, but there’s no such thing. It’s hard work, but it’s not impossible.

1. Ask Yourself Why

To be fair, you always should be assessing your purchases, but it’s even more important to do it when you’re about to buy something. You see, impulse can make us do things we’ll regret as we only think about the consequences afterwards.

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When you ask yourself why you’re buying something, you’re immediately reflecting about it. “Why am I buying a new (insert item/experience)?” The majority of the times you won’t find a decent reason for this question.

Why are you buying a new smartphone? Is there something wrong with the one you have right now? Why are you buying a new pair of jeans? Are the old ones broken? Or are you worried about what others might think if you repeat an outfit? Why are you going out (again)? Are you really going to have a nice time or are you afraid of being lonely? And not finding Mr/Miss right?

The point is: once you understand the underlying reason for your spending habits you’ll see that nothing will change by buying something. There are other ways to “solve” your problems without breaking the bank.

2. Have a Budget

Whether you have a daily or weekly budget, it doesn’t matter, as long as you have one. Ideally, you should never go over budget, but if you do, it’s not a problem, as it’s hardly the reason for having one in the first place. When you have a budget you’re forced to think about every purchase you make. So all of a sudden it’s not a matter of choosing, picking, paying and leaving – it’s a decision that’s going to affect something else.

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It’s even better to tie this budget to something that’s meaningful to you. It could be a long due trip to an exotic place, a replacement of the malfunctioning car or to reduce your ever increasing debt. When you start looking at the broad picture, you’ll stop your meaningless purchases in order to keep within budget and achieve whatever your goal is.

3. Don’t Spend Money That’s Not Yours

How many people do you know with massive credit card debts? Or people who ask for a bank loan as soon as they finish paying the last one off? It’s hard to say “no” to money that’s readily available, but it’s a mistake to believe that money is yours.

Credit is great if it’s used with a purpose and a well-defined plan – like starting a business for instance. It’s also a cushion to fall back on in case of an expected emergency. However, if you’re not in dire need, you should never use credit cards and overdrafts frivolously, or you end up paying the (hefty) consequences.

So if you’re getting to the end of the week or month and you feel you might not have enough money for rent, is it wise to buy a new top/t-shirt on your credit card? Shouldn’t you wait until you have the money to pay for it? The concept is simple: if you don’t have the money, don’t spend it. The more you get yourself in debt, the harder it is to get out. And when you add up all the money you’re paying in interest throughout the year, you’ll quickly see the problem you have.

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4. Be Willing to Change

One of the main reasons why people carry on with their financial problems is because they don’t want to change their lifestyle. You know that one of the definitions of insanity is: doing the same thing over and over again and expecting different results.

How many times do you eat out a month? How many times do you order a takeaway? Do you know how much money you could save by cooking at home? And before you say you cannot cook, remember that with practice you can achieve (nearly) everything. Do you drive to work? Do you need to? Have you considered selling your car and cycling to work? With services like Uber, Blablacar or Co-wheels/Turo, you’ll always have a car available to you.

People always dread a change of lifestyle; it seems like it’s not only a matter of comfort, but it’s also related to pride. A person might choose to get in debt and go to the gym with their friends, instead of exercising at home and looking like they don’t have money.

At the end of the day, you and you only know the problems you have. If you think your spending habits are not really affecting your life, I suppose there’s not much to worry. However, if it’s getting to a point where if you don’t take action things might start to fall apart, then you have to take it seriously.

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Do you have problems managing your money? Have you found a solution? Share in the comments below.

Featured photo credit: Alejandro Escamilla via hd.unsplash.com

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Guilherme Ribeiro

Freelance Writer

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Last Updated on March 4, 2019

How to Use Credit Cards While Staying Out of Debt

How to Use Credit Cards While Staying Out of Debt

Many people will suggest that the best thing to do with your credit cards during these tough economic times is to cut them up with a pair of scissors. Indeed, if you are already in huge debt, you probably should stop using them and begin a payback strategy immediately. However, if you are not currently in trouble with your credit cards, there are wise ways to use them.

I happen to really love my credit cards so I will share with you my approach to how I use mine without getting into deep financial trouble.

Ever since about 1983 when I got my first Visa card, I continue to charge as many of my purchases as possible on credit. Everything from gas, groceries and monthly payments for services like my cable and home security monitoring are charged on credit. Despite my heavy usage, I have maintained the joy of never paying any interest fees at all on any of my credit cards.

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Here are some tips on how best to use your credit cards without falling into the trap of paying those nasty double-digit interest fees.

Do Not Treat Credit Cards as Your Funding Sources

Too many people treat their credit cards as funding sources for major purchases. Do not do this if you want to stay out of trouble. I use my credit cards as convenient financial instruments so I do not have to carry around much cash. In fact, I hate carrying cash, especially coins. When you buy things on credit, the purchases are clean and you will not get annoying coins back as change.

I do not rely on my Visa, MasterCard or American Express to fund any of my purchases, large or small. This brings me to my golden rule when it comes to whether I will pull out any of my credit cards either at a retail or online store.

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I never purchase anything with my credit cards if I do not have the actual cash on hand in my bank account.

If I really cannot pay for the item or service with cash that I already have at the bank, then I simply will not make the purchase. Remember, my credit cards are not used as funding sources. They are just convenient alternatives to actual cash in my pocket.

Make Sure to Always Pay Off Balances in Full Each Month

The next very important part of my overall strategy is to make absolutely sure that I pay the balances in full each and every month no matter how large they are. This should never be a problem if the cash has been budgeted for my purchases and secured in the bank. I have always paid my full balances each month ever since my very first credit card and this is why I never pay interest charges.

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Using Credit Cards with Rewards

Most of my credit cards are of the “no annual fees” type, including one MasterCard on a separate account I keep at home as a spare in case I lose my wallet or incur any fraudulent charges. However, I do use a main Visa card which does have an annual fee because all purchases on that card reward me with airline frequent flyer points. For me, the annual fee is worth it since I do travel and I get enough points to redeem many free flights.

You have to decide for yourself if you will charge enough purchases on credit each year without paying interest charges to warrant a credit card that rewards you with airline points (or other rewards). In my case, the answer is “yes” but that might not be the case for you.

I occasionally use a MasterCard or American Express card on small purchases just to keep those accounts active. Also, I have been to the odd retailer that accepted only a certain type of credit card, so I find that having one from each major company is quite handy. Aside from my main Visa card which earns the airline points, the rest of my cards are of the “no annual fees” variety.

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So this is how I use my credit cards without getting into any financial trouble with them. This strategy is recommended only if you are not in debt, of course. In fact, it is worth keeping in mind once you’re out of debt so that you can keep your credit cards active and treat them responsibly.

What are your credit card usage strategies? Let me know in the comments — I’d love to hear what methods you use.

Featured photo credit: Artem Bali via unsplash.com

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