How to Spend Wisely

Create a budget and spend within that budget

Creating a budget and spending within that budget will ensure that you will not over spend. That is still the right way to go about spending. Having a clearly laid-out budget ever month or every week (depend on your preference) will help you prioritize your spending. For example, the highest priority must be accorded to personal lifestyle that has to be made in line with commitments like housing loans, utility bills, car payments etc. Only when the high priority needs have been taken care of, should the balance funds be used for other expenses.

Keeping Track of Expenses

Keeping a record of where you have spent your money and what you had spend on may sound like a lot to do, but it will pay off in the long run. This is because you would be able to have a better picture of your spending behavior and then you would be able to have better control on your finances. The most important purpose is so that you would be able to have a better understanding of your own spending habits. Knowing this would give you the opportunity to plan your budget better in the future and have a better handle on your finances.

Impulse spending is BAD

What is Impulse Spending? Do you own lots of shoes or clothes that you almost never wear? Do you have lots of gadget known to man (or woman) in your car or home? Do you come home after a day at the shopping mall with items you had no intention of buying in the first place? Do you purchase items that you didn’t realize you needed until you saw them on display in the store or after a friend said that you might need it or looks good on you?

If your answer is yes to one or more of these questions, you are guilty of impulse spending. When people are unable to save enough money for the things that are really important, like a house, a new car, a vacation, or retirement, impulse spending is often the culprit.

Impulse spending, or recreational shopping, can put a strain on your finances. To overcome the urge to over spend money, learn to recognize your needs from your wants. After learning to recognize wants from needs, you would need to practice controlling your impulses to spend your money on things you don’t really need. Only then you’ll be able to change your spending habits and end up far ahead financially.