Two days after you receive your paycheck, do you wonder where all the money went? Is your closet full of clothing and other items that still have the tags on them? Then your spending habits need some adjusting.
The most recent Gallup poll shows consumers’ average daily discretionary spending is now at $91 for the month of April, up $5 from one month earlier. This marks the second consecutive month that consumer spending has been on the rise. Gallup reports this is the highest April spending since the company first began keeping track of consumer spending habits in 2008. Although this is great news for the economy, it can be bad news for your wallet.
Many consumers aren’t saving enough for a rainy day. The U.S. personal savings rate has increased within the last 12 months (5.3% compared with 4.8% the year before), but there is still room for improvement. Approximately 44% of households across the nation have less than three months of savings, according to the Corporation for Enterprise Development’s 2015 Assets & Opportunity Scorecard. The CFED refers to this as liquid asset poverty. Furthermore, a recent Bankrate Money Pulse survey revealed that less than 4 in 10 people are capable of covering an emergency expense and about 18% don’t have a budget.
If you’re struggling to control your spending, there are a few things you can do to break bad habits. Here are three tips for regaining your footing and getting back on the path toward financial health.
1. Carry cash
One of the best ways to keep spending in check is to pay for most of your purchases with cash. When you rely on a credit or debit card, it’s easy to lose track of how much money you’re shelling out. Swiping your card is simple and can make you feel like you have more money than you really do. Cash, on the other hand, will allow you to see exactly what you’re spending. And when the cash runs out, you know it’s time to put your wallet down and stop making purchases for that day. Try your best to get out of the “buy now, pay later” mentality.
2. Use a spending tracker
There are plenty of mobile phone apps and online web tools that can assist you with keeping tabs on your spending. If you’ve been slow to devise a budget, these technologies are a great way to get started. Some useful apps available right now are Goodbudget, Mvelopes, and Pocket Expense.
3. Go on a financial fast
Resolve to cut out all of your spending for a certain period of time; it could be two weeks or one month, the timing is up to you. When you refrain from spending any money (except on necessities such as mortgage payments and groceries) you’ll quickly see what you can truly live without. If you need help getting started, one good book to help get you motivated is The 21-Day Financial Fast: Your Path to Financial Peace and Freedom, by Michelle Singletary.
