A massive part of becoming debt free is controlling your spending habits. It’s easy to say, but incredibly difficult to actually do.
Back when we were in debt, spending money without thought was normal. We bought what we wanted, regardless of whether we could afford it or not. Spending money thoughtlessly was intertwined into our DNA.
We didn’t make any progress on our debt free journey until we learned how to stop spending money like fools.
Learning how to stop spending money came to us in phases. We learned a little about money here, and then more there…never having a true mentor or person to guide us along the way.
Through painful trial and error, we eventually gained a stranglehold on our spending habits and we crushed $109,000 in debt shortly thereafter.
You can learn how to stop spending money. If you’re committed to bettering your financial life and becoming debt free, these 5 tips will propel you towards financial freedom.
Understand Your Emotional Triggers
Your mood and emotions are directly tied to your spending habits. Emotional spending can be summed up pretty easily.
It’s when you buy something you really don’t need, and you only purchased it because you’re triggered by your silly… yet powerful emotions.
An example would be going on an Amazon shopping spree because you’re sad, or even spending more at the grocery store because you decided to go shopping while hungry.
Personally, one of the worst financial decisions I ever made was an emotional purchase. I purchased a Kubota tractor that cost over $20,000 because I was in a terrible emotional place.
The purchase was rationalized and financed in about 5 hours.
I certainly didn’t need that tractor back then. I didn’t need to spend $20,000, but the spending scratched some emotional need I had at the time.
If you’re feeling sad, angry, or even happy… consider if the purchase you’re about to make is rational spending. Or, are you simply thinking with your amygdala and not your rational brain?
Your amygdala is an almond sized mass in your brain that’s responsible for how you deal with or experience your emotions. Good decisions rarely come from this tiny little grey bastard.
If you’re going to learn how to stop spending money, you need to understand your emotional triggers and recognize when you’re spending money in response to some external stimulus in your life.
Hit The Pause Button
How often do you stop before you make a purchase and think “do I really need this”? This doesn’t just apply to a diet coke that’s conveniently located by the register.
This applies to almost anything that you didn’t plan on buying until you laid your eyes on it. If it wasn’t in the budget OR on the list prior to opening up the laptop or heading to the store… WAIT!
There are few impulse purchases that can’t be delayed for 48 hours or longer. Hit your pause button before you buy. This delay in purchasing will solidify if that purchase is really needed, or if it’s just a childish want.
If after 48 hours or more you still think buying that item is a good idea, then go for it. I know that if I wait a few days, I rarely follow through with the purchase. Most of the time I forget that I even wanted whatever it was that caught my eye, or I understand the financial burden doesn’t match the emotional spending.
Use these impulses as opportunities to plan out your big purchases. Wish lists are a powerful tool, and most online shopping apps have them.
Put that item in your wish list and plan to keep it there for at least 48 hours, preferably longer. You can use your wish list as a quick way to give your loved ones ideas for gifts when the holidays roll around.
Pausing before buying is a quick and easy way to save hundreds, if not thousands of dollars.
Stop Caring What Others Are Doing
Keeping up with the Joneses is a financial cancer. A self-inflicted disease that robs your of your financial freedom and chains you to your 9-5 job.
Trying to impress your friends, people you work with, or total strangers with your ability to purchase material possessions is a common insanity we’ve all suffered with from time to time.
It feels good to have nice things, and it feels even better when someone acknowledges your nice stuff.
A good friend of mine makes terrible financial decisions because she grew up incredibly poor. Her childhood memories of others judging her based on her clothes haunts her to this day.
That’s some deep seeded emotional baggage. It causes her to make terrible financial decisions to prevent others from judging her, whether they actually are or not.
Learning how to stop spending money requires you to stop caring what others may or may not think about your material possessions.
One of the worst things about trying to keep up with your friends is the amount of money you typically spend to look rich. The average new vehicle cost around $35,000 in 2018.
$35,000!! The average American household income is $62,175, or $29.89 an hour. That new vehicle will take you 1,171 hours to repay. If you consider your tax rate and insurances costs… it’s probably much, much longer.
Holy crap, right? Thinking about purchases in terms of time is a great way to stop trying to keep up with your friends. Everything you buy is paid for twice. Once with your money, and again with your time.
Use both of those resources wisely.
Track Your Spending
Personal finance and dieting have so much in common. Both are about habits, long-term changes, and accountability! Sure, short-term crash diets work… but, those results aren’t sustained. The same applies for your money.
Financial fasting, or no spend challenges are great short-term methods to cut spending and save money, but they aren’t long-term solutions to your poor spending habits.
The long-term solutions are budgeting, tracking your spending habits, and holding yourself accountable.
The glorious part of tracking your spending is the accountability that follows. By documenting and reviewing your spending habits every day, you’ll quickly realize when poor decisions were made, or you’ll pause before making one of those terrible purchases.
Create an excel budget, or utilize budgeting apps like the Every Dollar App. Enter your spending every day and review it with your partner each month. This is an important part of learning how to stop spending money.
Cancel Your Credit Cards
Statistically, you spend more when using a credit card than when spending cold hard cash. There is something about swiping that sexy piece of plastic that doesn’t sting as much as parting ways with “real” money.
Also, when using your credit card you tend to focus on the perceived functionality of the product rather than the cost.
A similar argument would be that if you’re trying to pay off debt, why on earth would you want to accrue more? It’s the definition of counterproductive.
Cut up your credit cards and only use cash or your debit card. Personally, I hate carrying around cash and never utilized the cash envelope system.
I see why it works. I just find carrying cash around and stuffing envelopes wildly annoying and simply used my debit card and still do to this day.
Prior to becoming debt free, I would make purchases on my credit card and rationalize the crap out of it. 0% interest was a sweet deal, and those low monthly payments were music to my financially illiterate ears.
By cutting up and canceling our credit cards, we quickly learned how to stop spending money like fools. There are few magic bullets in the world, but this was one for us.
Once we canceled our cards, our control over our spending drastically improved.
Learning how to stop spending money is an important step in the direction of a strong financial future. Following through and making the required long-term change is incredibly difficult, but rewarding.
The 5 tips above will help you begin to gain control of your spending habits. Don’t fret if you feel overwhelmed, make small changes that are sustainable over a long period of time.
Your small changes will begin to compound, and before you know it… you’ll be saving hundreds of dollars a month that you never knew existed.
This is all possible, and you can do it!
Let us know how you’re saving money below in the comments!!