Want To Build Smart Spending Habits? 4 No-fail Ways To Get Started.
Jan 18, 2021
The changing dynamics of the world might have led Americans to change many things, but saving habits is not one of them. According to the Atlantic, nearly half of the US citizens do not even have $400 in their accounts as a reserve in emergencies. These statistics are bleak and point to a grave financial situation that we all find ourselves in. Saving rates in many of the world's developing economies, including Australia, New Zealand, Japan, and European countries, have been increasing steadily. However, America is not one of them.
The Covid-19 pandemic locked most Americans in their homes, and with traveling, dining out, and other activities outside their families coming to a static halt, it appeared that we were saving more. The savings aggregate improved for a few months. Still, while talking to CNBC, financial experts reported that the current trend might have significantly less or no lasting effects on Americans’ saving habits.
Our poor saving habits are linked to various societal and personal preferences. However, there is no denying that this global pandemic and the ever-changing pace of the world we live in demands that we take control of our financial decisions today.
Here are four tips and tricks to help you change your personal preferences and improve your financial savings to better prepare for emergencies.
1. Understand consumerism to navigate your expenditure.
Consumerism is a frequently used term, but it influences our lives more than we tend to understand. The US savings dropping from 11% in the early 1980s to almost zero percent now is termed as a direct negative impact of consumerism.
Psychologists have been trying to understand the human urge to overspend. Researchers such as Amy Novotney suggest that advertisements and the constant exposure of humans around these ads have led them to sway away from their needs. This has led to a vicious circle of compulsive buying behavior.
Workplace stress, personal struggles, and the burden of living in the 21st century are often shed by spending unintentionally and unnecessarily. The society we live in is, in reality, weaving a closely-knit bond of consumerism with you. The billboards, bus stops, and even your phones are laden with brands trying to get your attention. The information is so overwhelming and repeatedly fed to our brains that we give in. We give in to buy more, buy more to support ourselves emotionally, and buy even more to satisfy ourselves materialistically.
2. Discretionary and non-discretionary spending habits you need to know about:
Have you ever tried to list the necessities and luxuries separately in your grocery list? Have you ever tried to understand how many products you purchase each time you go for your weekly/monthly grocery shopping are not your current needs?
To become an efficient saver, it is essential to understand and accept discretionary and non-discretionary spending habits. Non-discretionary spending, in easy words, includes our needs, such as groceries, bills, taxes, fuel expenditures, and things we need to do to live a comfortable life.
On the other hand, non-discretionary spending refers to our wants - these are things we can conveniently do without. The frivolous purchases driven by our impulses are the ones that have to be evaluated very closely. These expenses usually come at the cost of our hard-earned savings and fool us into thinking we are "saving" money through sales and offers.
3. Budget with each paycheck to reach your saving goal.
Budgeting and keeping track of your spending sounds overwhelming to most of us. The usual thought of having a well-defined'' plan of our expenditures tricks us into spending more than we initially planned to do.
Budgeting before each paycheck can indeed help improve the financial outlook of our spending tremendously. Making a budget does not necessarily require complicated calculations. A simple plan to navigate your total income is an easy way to go about it.
Here are a few tips:
- With each paycheck, clearly outline your total money and how much you plan on spending.
- Write the non-discretionary expenses and calculate the total.
- Aim to save at least 20% of your total income.
- Spare some money for your discretionary spending now from the intended saving. This can work as an incentive to ensure that you do not take out money from the savings when you have the urge to spend.
- Transfer the money to an account that you cannot easily access. The harder it is to draw money, the easier it is to save it!
You can download many applications on your smartphone to help you keep track of your spending and help you budget efficiently. You can also sign up for my Done For You Budget program, which does all the work!
4. Use technology for a budget-friendly shopping spree!
Who does not enjoy shopping sprees?
Indulging in shopping, especially at that time of the year when the entire shopping mall is beaming with ''sale'' signs, can be too tempting. Here's the good news, though. Saving does not need to come with you killing all your urges to indulge in your favorite items.
The gimmick of deals and sales is mostly something that drives most of the overspending. The consumer, usually with the tags reading 50% off, ends up buying the products they might not need or might not use. The mental challenge of overcoming the fear that you are not missing out on anything if you are not buying something each time you are in a mall or your favorite store is the key.
Sales can do you enough good if you are a smart shopper and can, in reality, help amplify your savings. Using technology can help you make the most of it and help you get hold of the items you really ''need''. Follow these tips for support next time:
- Market research is a great idea to begin with. Raid the stores online and compare the goods you need from the price point.
- Please wait for the desired item to go on sale before you add it to your cart. Then compare it across original prices.
- No item is ''one left in stock''; you will find plenty of similar products in other stores. Explore other websites.
Next time you want to buy something that catches your eye, consider the savings you have committed to and pat yourself on the back for making it to your goal!
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