When you get to the end of the month do you find yourself a little short and wonder where all your money went? It’s probably because of all the money you spent on things you didn’t really need because of a lack of financial self-control. It might have been those bottles of Gatorade at your local convenience store and because you just couldn’t resist one of Amazon’s Deals of the Day. Or maybe it was all those drive-through coffees and breakfast sandwiches or those restaurant lunches with coworkers.
The problem is that when you’re spending just a few dollars it doesn’t seem like such a big deal and you just forget about it. But if this happens again and again throughout the month it can add up to a tidy sum and leave you wondering how you’re going to get through those last three days until payday.
The problem is financial self-control
The reason you’re running out of money before you run out of month is simple. It’s because of your lack of self-control. You’re making short-term choices over and over without thinking about their long term consequences. While it’s hard to make long-term choices, they’re almost always a better option.
Breaking out is hard
If you’re consistently making short-term choices, then breaking out of the routine can be difficult. It’s easy to get accustomed to all those little pleasures – like that bottle of Gatorade – that you want when you want them. You probably have long-term goals like retiring early or starting your own business but they get undermined by all those short-term decisions you make on a daily basis.
If this is the case, what can you do?
Here are six strategies that could help you gain financial self-control so that you will be able to achieve your financial goals.
Strategy 1: Ask yourself will that purchase help me survive?
Before you make any purchase ask yourself do you really need the item. This is true of whether you’re paying cash or using credit. Will the thing you’re about to buy help you survive? You need to ask this question before you buy anything as well as every one of your bills and every single line on those bills. If you answered “no” to this question this means that buying that item or service will only set back your plans for building a financial future. The simple fact is that financial self-control begins when you consider the negative consequences of everything you buy.
Strategy 2: Quit making excuses
The hard, cold reality is that every time you buy something you don’t really need you’re undercutting your future. You’re giving in and using money to buy something you happen to want now but taking away dollars that could help you have a better future. Whenever you make an excuse to justify a purchase you’re just choosing short-term desire over building a decent financial future for yourself. If you really do want to have a good financial future, you need to stop making excuses for giving into short-term desires. Stop rationalizing those purchases and begin realizing that every time you do this you’re just creating a setback in your financial future.
The people who issue credit cards are not stupid. They push them because they know that using plastic can distract you from how much money you’re actually spending. You just whip out that little piece of plastic, no money changes hands, and that latte or book is yours. You may not think at all about the consequences of what you’ve done until your credit card statements start trickling in and you find that they’ve become huge. Fortunately, there is a simple solution. Just pay cash for everything. Stop using your credit cards for some period of time. If you find there’s not enough money in your checking account to pay for a purchase then just don’t make it.
Strategy 4: Take no money or credit cards to your “tempting” places
You may not have ever thought of this but there are certain places where you may be spending money on short-term desires. Typical of these “tempting” places are the bookstore, the coffee shop, the electronics store and the clothes store. Your first thought might be to just avoid your “tempting” places. But that doesn’t really teach you anything. A better approach is to go to them sometimes but make sure you don’t take either a credit card or any cash. This will help you learn how to resist temptation. And resisting temptation is the very basis of learning financial self-control.
Strategy 5: Avoid costly social engagements
Do your social engagements typically revolve around clubs or restaurants where you’re strongly encouraged to spend money? Suppose you meet friends at a restaurant for dinner, go to a movie and then to a bar for a nightcap? You may not realize it but you’ve probably just spent $100. Stay away from these kinds of social engagements. Try to do your socializing either at home or at a friend’s house or someplace where you don’t have to spend money as part of the experience. For example, you could schedule a picnic somewhere or you could play soccer with friends at a local park.
Strategy 6: Track and review your spending – very carefully
The biggest reason that most people lose track of their spending and let it get out of control is because they really don’t know where their money is going. You should make a pledge to track all of your spending, carefully recording and categorizing every single cent you spend. There are tools such as Mint, Quicken and You Need A Budget that are easy to use and can help you do just this. You could even track and analyze your spending with a pocket notebook or a spreadsheet program. The important thing is to write down every cent you spend, divide it into categories and then review everything to see where you’re overspending. Doing this can be a real eye-opener. It’s almost certain that you’ve spent far more on stuff than you thought you had so seeing a monthly total of how much you spent at the Google Play store, on Amazon or at the convenience store may actually shock you. And it’s very likely that you could eliminate a lot of that spending so you’d have extra money to save or pay down your debt.
If you’ve never budgeted before, here’s a video titled Budgeting for Beginners that shows how to develop a budget using nothing but pens and a calendar.