This lesson you will concentrate on finding spending leaks in your budget and look at what you can do about them.
What’s the Problem?
Reasons some people can’t seem to get ahead are:
Spending habits can be changed if you:
1. Learn to recognize the “triggers” that put you in a spending situation. (You may see some examples in your Spending Log/Dollar Tracker.) Maybe you enjoy shopping at yard sales or flea markets. Perhaps, when you go to buy milk, other items in the store catch your eye. Do you eat out every Friday night? Does a coffee break mean you will buy an expensive coffee treat?
2. Learn to recognize the “triggers” in your surroundings that tempt you to buy. In stores, merchandise is often placed throughout the store in locations to attract your attention. Temptations can also be people, places, things, or even the mood you are in. Do you find yourself spending more money when you go shopping with a certain friend? Do you spend money when you are feeling “blue”? Learn to control the environment so
you can shop wisely. Here are other suggestions that might help:
— Can I continue to use what I already have?
— Can I make it for less money than buying it?
— Can I borrow someone else’s?
— Can I substitute something less expensive?
— Can I rent a few days instead of buying? (Example: carpet cleaner)
— Is this a need or a want?
— Should I buy?
6. Establish spending guides for you and your family to follow. Use your expense records to plan your spending. Set spending limits. Don’t spend more than you plan.
7. Use the “incentive plan” to help you and your family follow the budget you have made. Perhaps you can reward yourself for following the shopping rules. If you have brown-bagged lunch four days at work, treat yourself to lunch out on Friday. Or if the family has been sticking to the budget and not spending money on unneeded items, a treat such as a night out or a trip to the zoo might just be the incentive to keep up the good habit. Just remember—don’t ruin the budget by overspending on the special treat.
8. Keep credit purchases to a minimum. Think about what credit will cost and how else you might use that money. Remember, interest charges add to the cost of anything purchased with credit.
9. Buy from reliable dealers and make choices that best meet your needs. Keep all purchase records. If a problem occurs, be sure to register a complaint. Act promptly in case a warranty time limit is involved.
10. Try to reduce waste to help save money. Excessive use (water, lights, automobile), abuse, or lack of care that leads to expensive repairs or shortens the service life of a product, or throwing away useful items are all examples of wasted money.
Changing a Habit
Be patient. Psychological research indicates it takes three to four weeks to break an old habit and form a new one. So don’t expect miracles to happen overnight. We have also learned through weight control research on behavior modification that it is difficult to change all old habits at once. Just target one habit you want to change and work on it until you succeed. Then move on to the next one. Be sure to set realistic goals and realistic deadlines. Do not go on indefinitely—that’s just procrastination. Develop a plan that will give you measurable results. For example, you can measure how much you have saved by not smoking a pack of cigarettes a day.
Action Steps
Put your plan into action. Start today with your new plan. Launch your new plan with as strong a push as possible. Make an open commitment so others in your family know you are serious about reaching this goal. Arrange your environment to encourage your new habit. Practice it daily. Do something every day to reach your goal. Don’t allow an exception to occur until the new behavior is part of your daily life and above all—don’t get discouraged. Good money management habits are a means to getting the most for your money. Look at your habits today. Stop spending leaks.
What’s the Problem?Reasons some people can’t seem to get ahead are:
- Impatience—You want the product now.
- Impulse buying—You see something at a store or on a shopping channel and buy even if you had not planned for the purchase.
- Using too much credit. Interest costs are high.
- Lack of self-discipline in saving money so it can work for you by earning interest.
Spending habits can be changed if you:
- Identify the spending leaks that give you immediate pleasure or satisfaction, but don’t help you reach any of your financial goals.
- Substitute desirable spending behaviors that will help you reach your financial goals.
1. Learn to recognize the “triggers” that put you in a spending situation. (You may see some examples in your Spending Log/Dollar Tracker.) Maybe you enjoy shopping at yard sales or flea markets. Perhaps, when you go to buy milk, other items in the store catch your eye. Do you eat out every Friday night? Does a coffee break mean you will buy an expensive coffee treat?
2. Learn to recognize the “triggers” in your surroundings that tempt you to buy. In stores, merchandise is often placed throughout the store in locations to attract your attention. Temptations can also be people, places, things, or even the mood you are in. Do you find yourself spending more money when you go shopping with a certain friend? Do you spend money when you are feeling “blue”? Learn to control the environment so
you can shop wisely. Here are other suggestions that might help:
- Avoid exposing yourself to things that will tempt you to spend. Stay away from the stores except when you have something you absolutely need to buy. Avoid “just looking.” Browsing can lead to buying. Make a list and stick to it.
- Plan your shopping. Go with a purpose in mind. Use that list! Extras you don’t really need can add to the total at the cash register.
- Limit your number of trips to the store or the mall. Don’t shop in a weakened condition. Shopping when you are hungry, tired, or depressed can lead to overspending.
- What are your financial goals and priorities? Will this help you reach important goals?
- Consider the alternatives. Ask yourself:
— Can I continue to use what I already have?
— Can I make it for less money than buying it?
— Can I borrow someone else’s?
— Can I substitute something less expensive?
— Can I rent a few days instead of buying? (Example: carpet cleaner)
— Is this a need or a want?
— Should I buy?
- If you decide to buy, do some comparison shopping. Comparison shopping is important when making major purchases. Even small savings can add up on repeated purchases of relatively inexpensive items such as shampoo and paper supplies. Gather reliable and accurate information.
- Make your decision and take action. Then evaluate your decision. (Not all the choices will prove to be what you expect. Even if you later find that a purchase was a poor choice, the experience is a guiding lesson for the next time. You are gaining skills as a consumer.)
- Items that don’t rank high on your spending priority list.
- Items that are too expensive for your budget. (Know your limits.)
- The salesclerk who says it looks wonderful, when you know it really doesn’t.
- Friends or relatives selling things. Don’t buy just because you feel obligated.
6. Establish spending guides for you and your family to follow. Use your expense records to plan your spending. Set spending limits. Don’t spend more than you plan.
7. Use the “incentive plan” to help you and your family follow the budget you have made. Perhaps you can reward yourself for following the shopping rules. If you have brown-bagged lunch four days at work, treat yourself to lunch out on Friday. Or if the family has been sticking to the budget and not spending money on unneeded items, a treat such as a night out or a trip to the zoo might just be the incentive to keep up the good habit. Just remember—don’t ruin the budget by overspending on the special treat.
8. Keep credit purchases to a minimum. Think about what credit will cost and how else you might use that money. Remember, interest charges add to the cost of anything purchased with credit.
9. Buy from reliable dealers and make choices that best meet your needs. Keep all purchase records. If a problem occurs, be sure to register a complaint. Act promptly in case a warranty time limit is involved.
10. Try to reduce waste to help save money. Excessive use (water, lights, automobile), abuse, or lack of care that leads to expensive repairs or shortens the service life of a product, or throwing away useful items are all examples of wasted money.
Changing a Habit
Be patient. Psychological research indicates it takes three to four weeks to break an old habit and form a new one. So don’t expect miracles to happen overnight. We have also learned through weight control research on behavior modification that it is difficult to change all old habits at once. Just target one habit you want to change and work on it until you succeed. Then move on to the next one. Be sure to set realistic goals and realistic deadlines. Do not go on indefinitely—that’s just procrastination. Develop a plan that will give you measurable results. For example, you can measure how much you have saved by not smoking a pack of cigarettes a day.
Action Steps
Put your plan into action. Start today with your new plan. Launch your new plan with as strong a push as possible. Make an open commitment so others in your family know you are serious about reaching this goal. Arrange your environment to encourage your new habit. Practice it daily. Do something every day to reach your goal. Don’t allow an exception to occur until the new behavior is part of your daily life and above all—don’t get discouraged. Good money management habits are a means to getting the most for your money. Look at your habits today. Stop spending leaks.
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