Five Tips to Put the Clamp on Spending
Everyone struggles with controlling spending. Unfortunately, it is far to easy to swipe it, click it, and forget about those automatic recurring charges that can be costing us hundreds of dollars a month. Here are 5 easy tips that you can start doing today to help control your spending and put money back into your monthly budget.
1. Only keep 1 credit or debit card in your wallet
When we go to the store with a pocket full of credit and debit cards it can become far too easy to overspend, and then just pull out another credit or debit card to cover our shopping excursion. Be purposeful and direct in your spending by only carrying the one credit or debit card you use to manage all discretionary spending. This will make tracking expenses easier by making a single place to review all of your spending. Bonus points, if you can use a separate account from your main bank account used to pay bills, and then after each paycheck only transfer into this account what you WANT to spend.
Keep your credit and debit cards for other accounts at home, locked away securely. This will force you focus and decide what you are purchasing, how much you are spending, and how you are going to finance your purchase before going to the store. Often this simple process of having to decide (or make an extra trip home and then back to the store) is enough to stop impulse spending.
2. Unlink all of your bank accounts and credit cards from online stores and mobile apps
When spending money is as simple as just one click it can be very difficult to gauge how much you are spending in total each month. Go into your online stores, Paypal, and mobile apps and delete your saved bank account information. Just like with only keeping one card in your wallet, putting an extra step between the impulse to purchase that latest recommended book, new gadget for the house, or your favorite cup of coffee while you are out will curb many of the mindless single button click purchases we make.
3. Turn off unused services and recurring charges
Should you keep that gym membership you eagerly signed up for at the first of January, yet haven’t been back but a handful of times since? What about that mobile app you downloaded to help build mental focus and clarity for only $3.99 a month, yet you haven’t opened it in 2 months? Take 15 minutes and review the last 30 days of charges in your mobile banking app and credit card statement, and find unused services, then cancel them.
Today’s business model for many companies is changing from a one time sell of a product or service, to an automatic recurring charge. This can be a benefit for many consumers to pay a much smaller fee upfront to start a service, or only pay for a service on a month to month basis instead of long annual contracts. But it creates a trap where we can sign up, do a free trial, and then forget we are being charged.
4. Downgrade or switch providers for commodity services
Do we really need the $150 cable package? Could we make due with the $50 package? Or cut the cord entirely and just use Netflix for $15 a month? Granted, probably not the convenience and luxury of the top-tier cable package, but if we saved another $1,620 dollars this year by switching from the $150 cable package to Netflix would that be worthwhile? When is the last time you checked competitors for home services like lawn care, exterminators, etc?
Periodically we should review the commodity services like cell phones, internet, cable, lawn care, etc. hitting our monthly budget and seriously question if there is a cheaper option available (or if we really need to keep that service at all). There are companies fighting for your business and switching companies or going to a smaller package is usually as simple as going to a website or making a call. Especially in today’s fast paced technological world, new businesses are being created daily that can provide similar services at greatly reduced rates. Also, our situations in life change, and what was a once heavily utilized service is now just a charge coming out of our bank account each month.
5. Consider switching insurance companies
We are constantly inundated with ads to save thousands by changing car insurance. These are so overplayed on TV that they loose their power, but there can be cases where a change can save thousands of dollars a year. However, changing an insurance company requires a greater attention to detail than changing internet providers. Because of the hassle and exposure of credit searches, changing insurance companies shouldn’t be done unless the new provider can show at least a 10% savings over your current provider.
We recommend contacting insurance agents directly, or preferably go to their office to get insurance quotes. Many of the websites require you to put in all of your personal information and social security number before providing you an estimate. Be aware that the website will run a credit check before providing you that quote. So checking 4 or 5 insurance websites for rates can severely decrease your credit score for several months.
With these 5 powerful tips, you can begin to start saving money today, and reduce your overall monthly budget. “A budget is telling your money where to go, instead of wondering where it went” – John Maxwell. Take action today to start controlling where your money is going by limiting miscellaneous spending and reviewing automatically recurring services. Often these can go overlooked and can creep up over time, taking a larger piece of your monthly budget than you would like or realize.