Bad Spending Habits and How to Fix It — Saevr India

No matter who you’re and how much you earn in a month. The future of your depends on your current spending. People often say that despite a rise in income, they’re unable to financial wellness save enough for retirement or their children’s education. It happens because they don’t understand money well, ie., how much money you’ve and where it goes. Lack of saving goals or workable financial plans can drive you down to financial distress. Through financial discipline, you can achieve your goals promptly and can think about early retirement .

Ways to fix spending leaks

Know the motive of spending

Many people have no idea through which crack their money is flowing out, and they find it challenging to set a saving goal. You can make better spending choices if you have a clear picture of the motivation for purchasing items. So, ask the following questions to yourself before making the final decision to buy a high-ticket item.

• Why do I need this item? Is this item going to improve any area of my life which is currently lacking?
• Am I buying to satisfy an impulse?
• Is there any cheaper alternative to this item available in the market? If yes, then why am I not going for it?
• Can I rent the item instead of buying it?

Even after answering these questions, if you think it’s necessary to buy the product, don’t forget to compare the different brands’ prices and specifications. Collect all the relevant information and then evaluate your decision. These days reviews of products are readily available on the internet. Check those written by certified buyers.

Plan your spending

A spending plan or budgeting will help you prioritize your needs and maintain a balance between spending and savings. Budgeting is the best tool to anchor overspending. It involves four steps:

1. Identify your income. Never overestimate your income. Consider only your take-home, not gross income. Remember, your spending plan will work only if it’s accurate.
2. Make a list of your expenses — Add all your needs like food bill, rent, other monthly bills, savings, insurance, etc. Things of less importance (wants), like gifts, exotic items, etc. should be excluded from the list. Stick to your list and don’t go over the top.
3. Compare income and expenses. Subtract your total monthly expenses (from step 2) from income (Step 1).
4. Set priorities and make changes. Is any amount left after meeting the expenses? If that is the case, congratulations. You have started fixing your spending leaks. Now put the remaining amount into your savings.

On the other hand, if the difference is negative, you need to balance your income and expenses. You can do it either by increasing the income or by reducing expenses. Even doing both at a time is also a good idea.

Following a spending plan doesn’t mean that you should put yourself in a strict financial diet. You can do small extra spending occasionally. If you do so, then try to cut spending in some other category. It’ll prevent your budget from going off-track.

Track your money flow

Tracking the flow of money is crucial. It helps to stop overspending in specific categories and to increase your net worth gradually. But doing it manually or with a spreadsheet is tedious and time-consuming.

You can track your spending smartly with the help of an app, such as Saevr. Saevr helps you to create and track your budget, categorize your spending based on the items as well as merchants, and also helps you to differentiate between your needs and wants. So what are you waiting for? Download it now and increase your savings towards a decisive goal.

Use your credit wisely

Before using the credit card, try to understand the fees and interest rates associated with it. No doubt, a credit card is a powerful tool and more convenient than carrying cash. But ahead of making the first swipe of your credit card, learn how to make the best use of the credit card .

Practice self-control

Attaining self-control is a difficult task and also a slow process. Some behavioural modification may be necessary to achieve self-control. Develop a plan and make strategies to bring changes in your spending habits. Don’t set too many goals at a time. Your goals and deadlines should be realistic. Stay away from stores and sites that tempt you to spend, unsubscribe marketing emails of your favourite brands, stop giving expensive gifts to people, quit smoking, etc. are a few things through which you can save a lot every month.

The final word

Managing money is a challenging task. However, proper planning and the use of modern technology help to overcome these challenges and meet your goals swiftly. Set a plan and put them into action as soon as possible.

Originally published at https://www.saevr.com on September 21, 2020.