Do you have something you like to splurge on, even when it’s not the best idea? Whether it’s eating every meal out, picking up all the latest gadgets, or hitting the mall for shoe-buying sprees, your splurges could be costing you more than you think. Curbing the habit can help you build your savings and even tackle debt. Here are a few ways to do it:
1. Keep track of what you spend. Once you’ve recorded a few weeks or a month, highlight your luxuries (anything not totally necessary) to see where you’re spending the most.
2. Calculate what it’s costing you. That $4 almond latte you have every weekday may be just $4, but that adds up to a whopping $1,040 a year. To get a real sense of how much a splurge is costing you, calculate the cost for the next 12 months.
3. Prioritize your luxuries. Hey, we all need a treat sometimes. Instead of cutting out all of your luxuries, prioritize the ones you’ll enjoy this month. If you get that cool new sweater today, maybe the fancy dinner out can wait.
4. Tackle one bad habit a week. For most of us, going from spending maniac to mister frugal isn’t realistic. Instead of going whole hog, pick one habit to tackle at a time.
5. Give yourself alternatives. To get a habit change to stick, try replacing it with something else. Instead of a lunchtime shopping spree, take a lunchtime walk. If nightly dinners out are your weakness, start by cutting down to two or three a week.
6. Set long-term goals. Whether it’s a trip to Europe, a downpayment on a home or a $1,000 fund for emergencies, having a goal can help motivate you to change bad spending habits.
Just like breaking other bad habits, it isn’t easy to change a financial pattern. But making small changes is a great way to start. You might find that stashing away savings or paying down debt can bring you the biggest treat of all — financial peace of mind.
For more tips on budgeting and making smart financial decisions, visit our Budgeting section on PracticalMoneySkills.com.
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