Chapter 5: changing spending habits
Budgeting is about learning and making adjustments to help you get where you want to be. After you look over how you're spending money and compare it to your goals, make the adjustments you need to help you meet your aspirations.
Watch the Changing Spending Habits video to get the information you need to make adjustments to your budget.
Find your budget rhythm
A weekly allowance is a great way to treat yourself while getting disciplined over your new budget. Consistency is key. Once you land on a budget that works, stick to it. And, if you overspend one week, don't overcompensate the following week. Just stay with your plan.
Remember, this isn't about being perfect - cut yourself some slack and do your best.
Try these budget challenges
“$0 a day challenge”
How many days in a month can you spend $0? Keeping track of your progress can help you see how well you’re doing and keep you motivated. Though there are certainly days when not spending isn’t an option. And that’s okay.
Set a weekly budget — starting on Monday
When the money you allotted for the week is gone, you’re done spending for the week. This can help you be more selective during the week when choosing to spend at events, for meals out or a quick coffee — you name it. Especially if you’re likely to spend more when the weekend comes, it can be helpful to envision how much you will have left over throughout the week.
Cash only night out
Night on the town? Street fest? Weekend away? Only bring the cash you allot for the occasion. Dodge the surprise (or impulse) purchases.
Pool vs. solo-ride-sharing
Ride sharing offers options! Have the extra time? Take a ride-share pool vs. a solo ride. You’ll save some bucks and maybe make some new buds.
Create a spending plan
1. Start by making a spending plan before you get the money
Whether you want to spend it all, save it all or something in between, make sure it's on purpose. Having a plan in place for the money before it's in your account can help you resist the urge to spend it before you have it, or overspend. Money can disappear fast, especially when you're not keeping track of where and when it's being spent.
2. Does your plan align with your priorities?
Making decisions about your money should feel good! You should align your money with your priorities. Maybe that means a combination of saving and splurging, or maybe you pay down a debt. The point is, you decide how to use that money to meet your goals and make progress in the direction you've determined.
3. Build up savings
Get a jump start on saving and planning for your future. Here are just a few options to think about when it comes to your savings plan:
- First, consider different savings buckets.
- Beef up your emergency fund to help protect your budget from the unexpected, like car or home repair. Calculate how much you need here.
- Consider options for saving for your retirement through your employer (typically a 401k) or on your own (an IRA). Already saving? Think about bumping up your contributions.
- Put extra money in your Health Savings Account (HSA) if you are anticipating any upcoming medical bills.
4. Focus on your debt repayment
Make a list of all your debts, their interest rates and the remaining balances. Then, prioritize your payoff strategy, either focusing on your highest interest rate or lowest balance first. When you pay off one debt, roll the amount you were paying in to the next one.
5. Invest in yourself
Interested in starting a side gig or pursuing a new business opportunity? You can invest in your future by upgrading your laptop, taking that accelerated skill course or getting new headshots. Enjoy your hard earned money by making a plan you feel good about. While most prudent savers balance spending and saving, remember it's all about putting your money toward what's most important to you.
Your chapter 5 checklist:
- Watch the Changing Spending Habits video.
- Download the Budgeting 101 Worksheet.
- Figure out an allowance amount that works for you.