One common theme we hear from clients is that they don’t know where their money is going or don’t feel in control of their spending. Luckily, this is a solvable problem! Here are six ways to gain control of your spending:
Track your expenses
Getting control over your spending starts with gathering information. You can’t manage your spending while operating in the dark, and tracking your spending is the most effective way to shed light on where your money is going. Grab a notebook and pen or open a spreadsheet and start writing down your spending when you make a purchase, including the expense, the amount, and the category.
Identify your areas of opportunity
The data you gather from tracking your spending will help you identify your areas of opportunity. You can get the most “bang for your buck” by focusing on these areas. Where are you spending the most money each month? Are any categories significantly higher than you thought they were? For example, maybe you feel like you spend too much on takeout coffee, but by tracking your expenses you find that you’re spending $120 per month on coffee and $800 per month on shopping. If you can reduce your shopping by 25%, you’ll save $200 per month while reducing takeout coffee by the same amount would only save you $30. Your time and energy are best spent focusing on controlling 1-3 categories of spending.
Limit your triggers
While you might feel like you’re acting independently, you (and your spending) are influenced by your environment and what is going on around you. Do you find yourself spending when you’re with certain friends, at particular times of day, or when you pass certain stores? If you can determine what is causing you to spend, you can put measures in place to avoid those triggers.
Stop using credit cards
Rising credit card balances are a sign that you are spending is beyond your control. By taking a break from using your credit cards, you can at least ensure that you aren’t spending more than you’re making. Using cash or debit keeps you accountable and prevents you from overspending.
Be honest with yourself
As much as you may want to exercise control over your spending, you are getting something out of overspending. Maybe that’s a dopamine hit from a new purchase, feeling like part of the group by joining friends for a vacation, or avoiding the effort of having to pay attention to your finances. Whatever it is, acknowledge it and evaluate whether the reasons you want to gain control over your spending are more important.
Have compassion for yourself
While you work on gaining control over your spending, don’t expect yourself to be perfect. You are going to slip up and make mistakes. You can’t change your habits overnight, so expect slipups to be part of the process. Feeling like you messed up is a sign that you are actually working to make progress.
