Posted by: Brian | April 5, 2010

Bad Spending Habits

I have come to realize that I have several bad habits when I spend money. Some of the bad habits are very difficult to combat, especially for a twenty something living on his own away from his family. Over the past few weeks, I identified them and from some of the books I have been reading, I am not alone. Here are my top three bad habits of spending money and what I do to correct them or at least make their impact diminished. Also, this article on Get Rich Slowly has a very simple method to help you overcome yours as well.

Shopping online is way to easy. When I bought my iPhone, I linked my Apple App Store to the phone and listed a debit card on the site. This way I could download the latest games or app and not have to punch in my debit card number every time. I thought this was great and so I did the same for Amazon.com. I never had to think about the purchases because the process was so simplified. It wasn’t until I looked at my monthly bank statement that I realized how much I was spending on just these two sites.

Solution: I removed the debit card number from those sites and forced myself to manually enter in my debit card info. This might not seem like much, but when you have to enter 16 digits on the iPhone it is a big to-do. So far, I have not made any purchases on my iPhone since I started this mainly because I don’t want to enter in those darn numbers.

Buying in splurges to satisfy money cravings. I save and save and save some more but I eventually I would crave money. To satisfy my cravings I would go on these buying splurges after I had been saving for a long time, and these would usually negate half of what I saved. I liked to spend money because it made me feel powerful or like I was a big-shot able to spend where I wanted. I would go into a euphoria every time I went on these buying splurges (proven fact from research…will link when I find the article) and my mind would trigger cravings more often to get back to that same euphoria. Luckily, I wasn’t an addict yet but I just liked the feeling of buying.

Solution: Create a small amount of my budget for spending on frivolous things, like video games, books, or random nights out. This allowed me to control my cravings but also kept me within budget. I knew that I could buy whatever I wanted with my “splurge” money but it never stressed me out because it was factored into my budget. I ended up keeping my sanity and my finances together.

 

Not researching the product AND its intended use. Many times I would see something that would help me in learning a new skill that I had always wanted to learn. I like pictures and want to learn how to take good photos, so naturally I would see a digital SLR camera and want to buy it. I came close several times to doing just this. On other occasions I would not have the will power to stop myself, like when I bought magazines on woodworking because I want to eventually make a bookshelf.

Solution: Each time I saw something that would help me in learning that new skill, I would ask myself two simple questions. First, “Do I need this to learn my new skill?”, and 2) “Do I know the skills to apply this product to?” If I answer no to either question, I put the item down. This helped me this past weekend when I was in the local Borders. I saw a book on digital photography and was about to buy when I asked myself these questions. Since I don’t know how to take really good digital photos, I had to answer “no”to the second question and put the book down.

These are just a few of my spending bad habits and some of the ways I have taught myself to overcome them. I am definitely still working on better ways to control my “cravings” but even if I can reduce the amount I spend each time the better I will feel. What do you do to stop your spending bad habits?

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