How do you create better saving habits
The more you can save, the more frugal you can live. Living frugally means you can spend less, save more, and be more financially responsible. The money you save can be invested and doubled, used to pay off debts, or used to create an emergency fund. However, living frugally can be challenging.
How do you reduce your spending when you are accustomed to a more expensive lifestyle? How do you reduce your spending when your social circle lives an upscale lifestyle?
The answer to such questions is – Habits.
Forming a habit can change the way you live your lifestyle. The way you purchase items, consume food, or spend on entertainment can be altered so you can save more, if you alter your habits.
What are better saving habits you need to pick up on? This article has got a list for you.
Record each and every Expense
The first habit you want to inculcate is recording each and every expense. The expense might be as low as $1 for a chocolate bar – but make certain you record it.
Recording your expenses gives you an in-depth detail into your spending habits.
Making this into a habit is not as easy as you think. Why?
You might forget your expenses for the day. In your busy schedule, noting down your expenses may not be a priority and you might forget to do so.
So, how do you record all your expenses?
One way is to take a bill for every expense. At the end of the day, you can tally the expenses as per the bills you’ve collected.
Another method is to install an expense tracking app on your smartphone. As and when you make purchases, you immediately record it on the app.
Never Buy Luxury Goods Immediately
If the item you want to buy is not a necessity item, then don’t buy it immediately. What qualifies as a necessity item? A necessity item qualifies as a good or product that you must purchase regardless of your economic situation. For example, food and clothing can be considered as necessity items.
On the other hand, a luxury good qualifies as an item that you don’t require to survive. For example, a television or a car.
By never buying luxury goods immediately, you prevent impulse buying. This is even more critical when you see stores offer Flash Sales or Discount offers.
Research Before you Buy
While you are waiting to buy a luxury item, use that time to research the product and the market.
- Have you found a location that offers the best price?
- Is this the best product in that range? Is there another product with better features?
- Does the product have any known issues?
Compare prices and models so you know you are making the best choice possible, You want to make certain that you are getting the best value for money.
Build a Weekly or Monthly Budget
Regularly creating a budget is a fantastic idea. You can stringently plan and control your spending. Since you have been recording all your expenses, you have a fair idea of your necessity and luxury expenses.
A good budget should be able to optimize your spending. For example, you may have noticed that you eat out too often. Your budget should cut down on this expense.
Conduct a Weekly or Monthly Review
Depending on whether your budget is weekly or monthly, ensure that you conduct a review of it.
- Did you follow the budget you set out?
- Did you spend more than planned?
- Did you purchase an item that you didn’t plan on?
It’s not easy to follow a stringent budget. However, conducting a regular review helps you stick to the budget plan you have laid out.
How do you Build a Habit?
Turning each of the above points into habits that become part of your lifestyle is not going to be easy. However, picking up on these better saving habits will help you live frugally. Here are some tips to help you build better saving habits.
- Set Reminders:
Have reminders set on your phone, put up notes on your fridge, and stick a post-it on your fridge. You want to constantly be reminded of the new habits you wish to create and not forget any of them.
- Create a Habit Loop:
Perform a task many times over and it will become a habit. Studies have shown that if you are able to perform a task consistently for 20 days, it has a high chance of becoming a habit.
- Reward yourself:
Managed to consistently track your expenses? Stuck to your budget for the month?
When you achieve a goal, reward yourself.
Creating better saving habits is an investment. If you are able to inculcate better saving habits, then you live more frugally, save more, invest more, and you are more financially responsible.
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Record all the expenses is the best saving method.