Do you think you can go on a money diet this year? Most people shy away from the word “diet” because it is usually associated with feelings of pain, deprivation, and limitations. We all know how hard it is to go on a diet so we can lose weight or be healthier. We need to sacrifice a lot of things and sometimes, these cause us pain. We need to constantly battle with our natural urges because we know that a diet will help us improve ourselves.
A diet, when done correctly, can produce phenomenal results. But it has to be completed before you can really appreciate it. While the completion is necessary, you will feel the results the longer you go through with the diet. If a food diet can change your life, a money diet can also do the same.
According to USAToday.com, Americans have a knack for wasting their money. The article mentioned that we pay bank fees and other conveniences that are actually unnecessary. The small behaviors that we practice all lead us to waste our money. Instead of using the money on things that will improve our financial life, we are putting it on expenses that only provide momentary happiness. If you look at the big picture, you will realize that it does not really contribute anything to your life.
In case you made a promise this new year that you will correct your bad spending habits, you need to seriously consider going on a money diet.
What does it mean to put your money on a diet
The big question is, what does it mean to go on this type of diet?
The website, HappySimpleLiving.com provided us with an explanation. According to the site, going on a money diet would mean the following:
- Making a commitment to spend only on the essential expenses. A diet will not really deprive you totally. You will not go without spending – at least not completely. What you will do is to identify the basic necessities that you and your family will require to survive. Take note that this should be strictly what is necessary only.
- Going on a certain period without spending on unnecessary things. Anything that is not part of your basic necessities will not be spent. That is the second aspect of a money diet. You have to keep yourself from spending on the things that are not necessary.
- Saving the money that you will not spend. Since you are not spending on the unnecessary items, you have some extra money with you. To make the financial diet effective, you have to save that money. Do not spend it. Put it aside so it can be used to grow your finances exponentially.
You may be wondering, how can a financial diet help you improve your finances? There are many reasons but the bottom line is, you will develop a lot of good habits that will allow you to make smarter decisions about your life. Of course, this is only possible if you implement this diet the right way.
Just like any food diet, you need to choose one that is perfect for your needs. A crash diet, for instance, may be effective in helping you lower your weight fast. But it is hardly effective when it comes to long-term weight management.
It is not enough that you go on any diet. You need to choose the right one that will help you the most. According to a feature on HealthyWeightForum.org, the diet that you will choose will dictate what you will eat or drink throughout the day. This is based on the definition given by the National Institute of Diabetes & Digestive & Kidney Diseases (NIDDK). This is why you need to take into considerations the calorie intake that your body needs each day. You should not only concentrate on what will make you healthy. You need to consider the energy that you need to spend to accomplish your responsibilities.
The same concept can be applied to a money diet. You have to consider your unique financial situation and the purpose by which you are going on the diet. What you will choose will affect how you spend for your specific lifestyle. Restricting yourself to any financial diet is not enough. You have to consider the reason why you need the diet – this will help you decide what type you will use.
For instance, one money diet involves selling your car so you can save the money. While there are a lot of savings to be had, this will not work if you live far from your home or if you have kids. A car can help with the mobility of your family. Think about your specific conditions before you decide on what you will do. Be careful about your choice because the wrong one might damage your finances and not help it.
Tips before you start your financial diet
Before you proceed with a money diet, you have to understand the right way to implement it in your life. Just like a food diet, this will entail sacrifices so you can reach your goal. If you choose the wrong type of diet, you might end up going through all the pain for nothing.
To help you succeed with your financial diet, here are a couple of tips.
- Define your target. Start by defining your target. Understand why you are going through this diet. Being smart about your finances means you have to start by setting goals. At the very least, this will help motivate you as you are forced to go through the sacrifices that are included in the diet. This target will also help you gauge the progress that you have made.
- Identify the time frame. Nobody can go on a diet forever. You might feel very passionate about it at first but that will soon tire you. Once you feel burnt out by all the restrictions and limitations, you might end up going on a shopping spree – much like binge eating after a crash diet. You can start by making it a week or a month long. Then you can do it consistently and at the same time each year. But do not subject yourself to a long diet if you do not have to.
- Specify the rules. The next step is to clearly state the rules of the diet. Will you strictly refrain from spending on unnecessary expenses? Or will it be concentrated on dining out? Will it be refraining from using your credit card? Make sure you define the rules involved so you will not falter in the middle of the diet.
- Set milestones. You need to set the milestones, not just to track your progress, but also to let you celebrate them. Even the smallest milestones should be celebrated because that will motivate you. It will help you look beyond the sacrifices that you have to go through.
- Establish a reward. Knowing that a reward is waiting for you at the end of the money diet is another way for you to feel motivated. It is like a marathon runner – they push forward because they know that there is a medal waiting for them at the finish line. You should make sure that this reward is something that will not compromise or destroy what you have worked hard for in the diet. For instance, if you saved a lot of money because of the diet, do not make your reward too expensive.
- Tell someone. Finally, if you will go on a money diet, make sure someone knows about it. That way, you will get the support that you need. Not only that, knowing that someone is aware of your diet will make you strive to achieve your goal so you can save face.
All of these tips should hopefully make you strong enough to withstand the struggles, temptations, and sacrifices involved in a financial diet.
Sometimes, going on a money diet with debt can be quite distracting. If this is keeping you from the motivation that you need to complete the diet, you should probably try to consolidate all your bills. Simplifying your payment obligations will keep you from thinking about money too much. That will lessen the temptation to use it for other expenses.
In case you are not sure if you really need this money diet or not, you need to see this video. It will help you understand if you need to go through this process of restriction or not.