Has your wallet grown since out Tip #3? If you aren’t, don’t worry, it takes time to financial freedom. Hence, we are here for another tip! This article mainly focuses on how you can make better spending decisions to match your budget.
Often times we are still not consciously thinking about our spending behaviour which lead us to buy things we don’t really need or having to spend them on occasions we feel like it. This is a bad habit that affects our ability to maintain a budget and restrain ourselves from financial freedom. Therefore, we should start practising conscious spending; to be mindful of where one’s money is going.
So what is conscious spending and how can we achieve this? First of all, you could start by asking yourself the following questions:
Will I use this?
It’s a common to make spontaneous buys and end up being disappointed at the end of the month with remarks like, “I shouldn’t have spent on…”. For example, cool new gadgets are often very attractive in the beginning and may even be useful for a while but you need to consider the lifetime value and if it’s something you will actually make use of.
Can I get this cheaper or free?
Can I borrow it from a friend? Can I find it second-hand somewhere? And if I have to buy it, are there any other stores or marketplaces that sell this cheaper?
Can I wait to buy this?
Why do I need to buy it today? If it is an urgent need, then no question. But if not, why not wait a week and explore other options and see if you are still interested in buying.
Why am I buying this?
Does it fill a need? Or it is just something I want?
Is there something else I’d rather spend my money on?
A very important question to ask, are there more urgent things you need to spend your money on? And if you do, will it still fit in your budget?
Secondly, start tracking the above mentioned leaks in your wallet. This is a good way to start taking control of your money and spend consciously. Examine your spending and see if there are things you could reduce. Perhaps you can look for cheaper alternatives for lunch places. Start noting on these habits and start replacing them with rules. For example, bring enough cash with you for lunch so that you can restrain yourself from getting other unnecessary items when you see them.
Conscious spending is not supposed to restrict you on doing fun stuff or enjoying good food. You could still reward yourself from time to time if your income allows you to do so. More importantly, it is about making smarter spending decisions to reach your financial goals.
Don’t have a financial goal or don’t know where to start? Find out in our next article, WalletFriend Tip #5: Your Financial Goal.