Just because I try my hardest to be smart about my spending doesn’t mean that I don’t love to shop. In fact, I probably love it more than most people, which is why it got me into trouble a few years ago, and eventually led me down a path to better budgeting. When I got my first job, no one ever mentioned that it might be a good idea to put aside money for later, so I went out on weekends with friends and bought whatever I wanted. When I went to college and got my first credit card, I only got worse. I was able to make any purchase I wanted, even if I didn’t have money readily available. I always promised myself that I would pay it back right after my next pay day, but there was always something else I wanted, needed to have, and my debt grew. It wasn’t until I was no longer responsible solely for myself, but instead had another important person in my life to worry about, that I realized I had made a few mistakes. All of those silly charges I ran up on my card for expensive gifts or clothes I’d never wear seemed so trivial when real-life monthly bills started to roll in, and I felt pretty ridiculous about the poor choices I had made. How could I change my habits to get myself out of debt and control my spending?
While some of my spending was pretty unnecessary (I was known for giving over-the-top gifts, which I justified through generosity, obviously), there were still things I did need to get for myself – essentials like clothing and food, but I also needed money for things like a microwave in my dorm room or new winter boots for hiking to class every day, things that might not be completely necessary, but would be nice to have if I could swing it. And shopping was fun, so I wanted to be able to still do that sensibly while paying down my debt. So what did I do? I started to follow some of the simple guidelines I’ve listed below. You don’t need to eliminate everything fun from your life because you’ve made a few mistakes, but you can learn from them and learn to spend smartly and within your means.
1. Budget for your spending. My main problem was that I spent absolutely all of the money I had and then some, and I left no room for necessities like bills and groceries. With a budget, you can plan out all of your essential payments for the month and figure out how much you can dedicate to more fun things like shopping for clothes, electronics, etc. You may not be able to afford certain things all at once, but if you budget to save over time for them, you’ll eventually be able to make a cash purchase instead of sinking farther into debt.
2. Only buy what’s on your list. Make a list of all the things you’d like to purchase (within reason) and work off of that. Don’t blindly go into a store without a goal (sometimes I call this the “man method” of shopping). You’re more likely to overspend when you’re out just casually browsing. Get in and get out with only what you need.
3. Shop with cash. Take only the money that you’re planning to spend to the store. You can’t spend what you don’t have, so don’t tempt yourself by bringing a credit card along.
4. Think before you buy. I’ve learned that when I find something in a store I like, I need to take a step back and think about if I love it or not, if it’s something I really need or something that will be pretty useful. If I can’t see myself using it often or repeatedly, there’s a good chance I’ll put it down and walk away. You can always go home and give it more thought. If after a day or so, you still feel like it would be an essential purchase that fits within your budget, go back for it.
5. Identify times when you’re more likely to spend and look for alternatives. I was prone to overspending when I was out with friends. Nothing is more encouraging than having someone tell you how amazing you look in that new dress, right? Instead, let your close friends know that you’re being mindful of your money and find something else to do instead. Chances are, they’ll thank you, because you’ll probably save them a few bucks, as well.
In what ways are you a smart spender? How do you create room in your budget for little indulgences without going overboard?
