How You Can Spend Responsibly
It’s easier than ever to overspend. Not only can you swipe and tap your credit card just about anywhere, but you can easily spend money on your computer, your phone, and your tablet. It’s possible to effortlessly spend money just about anywhere at any time. This can make it very difficult to spend your money responsibly. However, if you’re not careful, you can easily wind up spending more than you can afford. If you do, you’ll have trouble paying your bills and you could even end up in serious debt trouble.
It takes time to learn how to manage money and spend responsibly. Here are some tips.
Have a Plan
Not having a spending plan or a budget is a huge reason why a lot of people overspend. If you don’t know how much you can reasonably spend, how can you know if you’re being responsible? Not only can be a big problem.
To solve this problem, sit down and create a budget. Write down how much you earn in an average month (don’t count bonuses or tips, only think about the income that you can count on receiving). Then write down your costs. You’ll have two types of expenses: fixed expenses and variable expenses.
Fixed expenses are things that you need to spend money on each month and that you can’t change very much. This includes your rent or mortgage, your monthly transit pass or gas for your vehicle, utility costs, cell phone and internet bills, and other such expenses.
Variable expenses include almost everything else, from entertainment to clothing to eating out.
Once you know how much you earn and how much you spend, you’ll need to create a plan to afford everything on your current income. If you can’t, you’ll need to reduce your costs.
Track your Spending
Tracking spending is hugely important. If you don’t track how much you spend, it’s incredibly easy to spend more than you should. Use an app on your phone, a spreadsheet on your computer, or a pen and paper to record everything you spend money on. Make sure you track everything (even the smallest purchases – they add up!) and try to note your purchases shortly after you make them, so you don’t forget anything.
Think about what financial goals you’d really like to achieve. Maybe you’d like to buy a house or a car. Maybe you want to take a vacation. Maybe you’re saving for retirement or emergencies. Whatever your goals are, write them down. Then, if you’re tempted to spend on something unplanned, you can think about your goals and refocus on what really matters.
Consider Using Cash
It’s incredibly easy to overspend when you’re paying with a card. This is especially true with credit cards. When you use debit, you’re only able to spend what you have in the bank, but credit cards let you spend much more and potentially get into serious trouble.
That’s why it can be a good idea to shop with cash whenever you can. Follow your budget, take out only the cash that you’ve designated for the expense, and then head to the store, leaving your credit cards at home.
Shop with a List and Avoid “Impulse Buys”
Before you go shopping, make a list of what you’d like to buy and put estimated prices beside each item. Then add it up and plan to only spend as much as you have written down on the items on your list. When you go to the store, don’t buy anything that you don’t have listed. This will help you avoid “impulse” items that you don’t really need anyway.
Know How Much You Owe
Part of spending responsibly is know how much you owe on your credit card and other debts. Keep a running total of what you owe and make sure that you have a plan for paying this money back. When you know how much you owe, you’ll be much more likely to borrow responsibly.
Take Time with Large Purchases
Before you make a larger purchase, take some time to think about it. Just the act of leaving the store or closing the website can cause you to reconsider. Before you buy anything, look at what you already own. Do you really need the new purchase? Really thinking about your purchases and whether or not you truly need them can help you spend much more responsibly.