Spending too much time in your overdraft? Wondering how to stop yourself from spending money on unnecessary things?
It’s probably time to re-evaluate and confront your spending habits.
Where is your money going?
Overspending habits may be obvious. A shopping spree, a holiday, a meal out, taxis everywhere. But sometimes, it’s a less clear case of financial death by a thousand papercuts.
For example, that completely reasonable and totally deserved £2.50 hot drink you grab every morning totals over £900 a year — more than the average UK monthly mortgage payment. And in 2018, nearly 85% of UK consumers’ credit card payments went towards spontaneous purchases—only the remaining 15% were for regular bills and commitments.
But it’s just one thing, you cry. My coffee, my subscription box, my cheeky pint, my gym membership, my lottery ticket, my magazines.
That’s fine. We all need more than tea and toast to live our best lives. But altogether you may not realise just how much you’re spending on those things.
Track and budget
If you want to know how to stop spending money on unnecessary things, the first thing to do is plan where you want your money to go (budget) and compare that with were it is actually going (tracking).
With Money Dashboard, you can quickly do both. Connect your cards and bank accounts and look back on past purchases. Automatically categorise them by groceries, drinks, vacation, transport and more. From there, you can easily analyse your spending behaviour.
Be prepared to grimace. Chances are, your estimated £200/month for going out is more like £400. And your shopping habits are adding up fast.
How to not spend money
You deserve to treat yourself. You do. But you also deserve some financial stability.
So rather than cut yourself off from all of life’s little luxuries, the best ways to stop spending money in the UK is to reduce weekly or monthly spending in each category that you are continuously going over budget.
Not sure you can do it? The following six strategies can not only help you spend less, but change how you value money.
Ask “Do I need it?"
For many of us, our regular little purchases include innocent items like junk food, fast food, coffee, a new t-shirt, trinket or cheap accessory. Just think: will I be glad I bought this tomorrow? In an hour from now? Do I have a place to put it when I get home? Do I NEED or do I WANT it? These little purchases add up fast, and taking a moment to consider their necessity will help you cut down on spontaneous spending.
Stop spending on credit cards
The best way to stop spending money on a credit card is to put it away. A study by Dun & Bradstreet found that people generally spend 12-18% more when using credit cards instead of cash. Even scarier, one 2001 US study found shoppers spend 100% more when using their credit card to pay instead of cash. Cards simply give us a false sense of what we can afford and make it too easy to tap money away. Instead, try a cash diet: use hard cash or a prepaid card, and only take that with you for the month. Track your balance and you’ll quickly start to think twice about what you bring to the till.
Cut down on monthly subscriptions
UK consumers are spending over £2 billion every year on monthly delivery subscriptions. But here’s the kicker: one in five don’t even use the services they’ve signed up for. And we’re worse when it comes to entertainment service subscriptions: paying an average of £149 per month. Money Dashboard will help add up how much you have spent on monthly and annual subscriptions. The results may surprise you. Do you even remember that you have an annual English Heritage subscription? When was the last time you used the gym? Does your dog/cat really enjoy that monthly treat box as much as you hoped? Are you getting good value for money for that clothes/coffee/makeup/wine/cheese/beer of the month club? When in doubt, cancel.
Going out to eat should be top of the list of things to stop spending money on. Cooking at home is much cheaper, even healthier. In 2017, 39p of every pound spent went to food stores. Meal planning not only helps you spend less money on food, it starts a weekly ritual that, with a bit of discipline, brings big rewards. So set up a weekly plan for each meal, make a grocery list and stick to it. Need inspiration? There are a lot of websites, blogs and social media accounts that create free mouth-watering and easy-to-cook meal-plans and lists each week.
Think twice about sales
While sales are a great opportunity to get the items you want for less, make sure they are something you want in the first place. “Limited time only” sales and coupons create a sense of urgency that bypass your natural hesitancy. If possible, think on it for a day or two, ideally three. If you still want it, and if fits with your budget, then go for your life.
Avoid taxis whenever possible
Sometimes there’s little to no choice but to catch a taxi or Uber or whatever ride-hailing app is trending. But there’s a good chance you’re overdoing it. Could you have walked, biked, taken a bus, or just planned your schedule a bit better? Probably. Try cutting taxi trips in half and see how that changes your approach to transport.
Saved some money? Great! Now put it to work and start building your wealth to reduce the temptation to spend it. Start by paying down debt, building an emergency fund and putting some into an investment. Better yet, automate monthly transfers from your account after payday into a savings or investment account.
Remember, “spend less, save more”. It’s a motto to live by if your want to reach your financial goals.