scorecardresearchRecession on the horizon? Follow these 5 steps to rein in your expenses

Recession on the horizon? Follow these 5 steps to rein in your expenses

Updated: 17 Feb 2023, 12:02 PM IST
TL;DR.

How do you control the urge to spend on something you may not need in the long run? This is a question that begets a careful understanding of what provokes you to spend impulsively and if the same can be tackled with careful planning and budgeting.

Control your spending habits with careful planning.

Control your spending habits with careful planning.

The fear of recession is real as its probability. This mandates us to ensure a continued flow of earnings while our expenses must be reduced to a bare minimum unless otherwise needed. Despite having access to a stable income source, many people cannot control their spending habits, thus, resulting in unwanted piling of debt and liability.

Not all of them have access to personal financial advisors who can advise them on how to control their spending habits. Reining expenses can be easy if you are willing to follow some simple steps to protect your finances. Some include:

Have financial goals

You cannot save your money unless you are serious about your financial goals. These goals must be palpable and measurable, or else you would find it difficult to plan them and then aim for them. By setting specific goals, you can better decide your savings and expenditures. The best way out is to track your spending behaviour either manually or using any of the mobile apps available today. People who set specific goals are more likely to achieve them, which is why you must not go haywire while planning them. Visualize how much money you would have if you achieve your financial goals within the stipulated period so that you feel motivated to achieve them.

List your essential expenses

Not all expenses are necessary. However, some people spend more money than they had planned. This begets the need to have a list of what you wish to buy versus what you must spend. This will help you avoid going on an unwanted and unplanned shopping spree, a habit that has ruined many people’s finances in the past. You will thus be able to focus on your needs while avoiding non-essential purchases.

Have a budget in mind

Many people question the need to plan a budget. Working on a realistic budget involves understanding where your money is going and identifying areas where you can save. An effective budget can help you reach your financial goals just by creating one. People who adhere strictly to a budget tend to be free of debt most of the time. Proper budgeting will lend you much-needed clarity on spending trends. This will also help you make informed decisions about how to spend your money.

Avoid spending using cards

You can save money by buying with cash only. Using cash limits the amount you can spend. You can't use it if you don't have it. This strategy can be improved by keeping money in large denominations that are difficult to use and less prone to expenditure.

Resist the temptation to spend

Avoid the idea of going to stores that sell costly gizmos. Refrain from succumbing to sales advertisements. This is because people exposed to attractive products are more likely to make impulse purchases. You can do this by avoiding stores that you know will trick you into buying things you don't need. Also, unfollow social media accounts and handles that promote products and services you will never need.

It may take considerable time and adherence to a rigorous schedule to rein in your spending habits. Fret not, as getting rid of the tendency to overspend is not that difficult. A plan with clear financial goals coupled with the need to create and stick to a budget will go a long way in saving you money that you would have spent otherwise.

 

Article
It is recommended to first allocate money to savings every month before spending.  
First Published: 17 Feb 2023, 12:02 PM IST