Do you need more money?

Yes?

I believe everyone won’t mind having some extra cash in their pockets.

Having more money always feels good.

But the trick is to know how to spend our money wisely.

For some of us, our money troubles is because of not making enough money. While many others, the problem lies on overspending on things, or worst, spending more then they can earn.

But in both cases, it is not good for our wallet.

According to Time Magazine, nearly 73% of Americans die with massive amount of debt in their name.

That’s a lot of people who are in debt!

In this article, we will teach you some tricks on how to spend money wisely. We shall empower you to get the most bang for your buck.

Let’s dive into the topic on ‘Spending Money’ and take a look at some tips to spending money wisely now!

Editor’s Recommendation: 5 Step Guide to be Debt-Free!

1. Create a Budget

Learn how to create a budget is one of the most important life skill. Budgeting is the bread and butter of managing your personal finance efficiently. You can start by first tracking your monthly spending and income. This will help you get an accurate picture of your current financial health.

What I usually do is to write down my purchases in my trusty notebook. I will usually do it at the end of the day (Personal finance app are also available). This process takes me not more than 5 minutes to track my daily expenses.

At the end of each month, I will review my bills and add those expenses to my budget. By comparing my income and my expenses, I will get an rough idea of my financial health. I will know if I am over spending my income.

To help you better in your expense tracking, here are some tips:

  • Organize: List your purchases by category such as: food, clothing, entertainment, bills. etc.
  • Categories: Those categories with the highest monthly spending amount are great targets for saving money.
  • Breakdown: Instead of just a monthly budget, you may want to drill down to a weekly budget for each category.
  • Allocate: Lastly, total budget have to be smaller than your income for that period, with some leftover for savings and investing.

2. Plan Your Purchase

Like almost all things related to success, planning is always the key. Spending money wisely is not an exception.

If you want to spend your money wisely, you have to plan for your purchase. Buying something because you just feel like it, don’t usually lead to good financial decision. Often making a purchase without proper planning can balloon your spending.

Here are some tips for planning your purchase:

  • Before you go down for your ‘shopping expedition’, do some research online on the items which you intent to purchase; look at the price they are selling and read the review of the item before making a commitment to purchase it online or at retail.
  • Write down what you need to buy before you go for your shopping trip. This will not only save you money, but it will save you time as well.
  • Heard of window shopping? Enjoy the shopping experience by not spending money. Take note of the prices of several alternatives at three or more stores. Only after you are sure you want the item, then you may want to commit to the purchase.
  • Focus, focus, focus! There are tonnes of things you want but only a few that you need. More focused you are on what you want in the store, the less you will spend.
  • Beware of Freebies! Taking and accepting free samples may convince you to make a decision on buying now. A decision that you may regret later.

3. Avoid impluse Purchase

Impulse purchases is a no no. If planning your purchases is a good idea, buying something on an impulse is definitely a terrible one.

I brought a wedding photography package while doing window shopping in a shopping center once. I paid on the spot because the package sounds so cheap and it comes with all sorts of freebies. After I told my girlfriend of the purchase, she reprimanded me for weeks for buying the package without her consent (Girls take wedding photo very seriously!). My friends reprimanded me as well, they show me no pity either.

Be warned, avoid impulse purchase!

Here are some tips to avoid impulse purchase:

  • Do window shopping with care! You may end up buying something. Often if your self-control is low, you will likely end up spending on stuff you that may not be most suitable for you.
  • Don’t make purchasing decisions when your judgment is impaired. Guys and girls, remember; alcohol, drugs, or even lack of sleep can reduce your ability to make sensible decisions.

4. Make Your Own Decision

Always make your own decision during shopping.

Remember the time that your friend says that dress is beautiful and 10 minutes later both of you bought something from that store?

Your children, friends or even a colleague whose tastes you respect can influence you to spend extra money. Everyday kids have ‘convince’ thousands of parents to spend extra money on things they may not want in the future.

Here are some simple tips to help you make your own decision during shopping:

  • Do not take advice from store employees too seriously. Remember they are here to sell you something. Think independently. If you need a question answered, politely listen to their response but make purchasing decisions on your own.
  • They sell, you buy. A salesperson is here to sell you their service or product. It is in their favor to sell you something that gives them the most commission and earn them the most money. Decide on your own if the product they are selling is something you will need and take their advice with a pinch of a salt.

5. Pay In Full

Credit cards and 0% installment plans for consumers items are some of the many reasons that people overspend. These payment options basically increase your appetite to spend by 2 main reasons:

  1. You can spend your future money which you don’t have right now
  2. You don’t physically see that you are giving your money to the salesperson when you purchase the item

With a wave of the credit card and no physical cash changes in hand makes buying stuff easy. The ease of payment makes you ‘feels’ as if you haven’t spend anything, though you might have spend everything.

Here are some tips to help you in cutting your spending:

  • Don’t run a bar tab, or use an installment for consumers items because the delay in payment will confuse you on how much you are actually spending.
  • Pay in cash so that every transaction feels real and not just some digital numbers
  • Bring just enough cash with you, not too much more than what you need.
  • Set a budget for your weekly budget withdrawal from an ATM rather than making an withdrawal whenever you run out of money.

Editor’s Recommendation: Good Debt vs Bad Debt

6. Sales and discounts

Sale! Sale! Sale! Everyone loves sales!

Similar to how I love to invest during a stock market crash. The rare opportunity where all stock are on Sale! Buying of our everyday items is the same as well.

We should always wait for sales and discounts for our purchase. If you know you will need an item in the future but not today. It may be a great idea to wait until it is on sale to buy it.

Here are some ways you can purchase an item cheaply:

  • Use a coupon, almost most shops nowadays have some sort of coupon available for the consumers to use. Even fast food chains like MacDonald and KFC have coupons online if you search for them.
  • Buy the product you will need in the future during the end of season sale. Store owners will usually put their winter coat selections on sale during summer when no one is buying. But during winter, the coat may cost twice as much. A dollar saved is a dollar you may want to invest in the future.

Editor’s Recommendation: Passive Income vs Active Income

7. Reward Yourself

Do rewarding yourself can really help you spend money wisely?

Yes!

Research have shown, giving yourself occasional, inexpensive treats can actually helps you to focus on your goals better.

Heard of ‘Cheat Day’, the term that gym junkies loved. The day where these gym lovers can eat whatever they want for that one particular day of the week.

But this ‘Cheat Day’ comes with a condition, ‘They have to complete what they should do for the rest of the week, aka exercise rigidly in the gym’. Once their mission is completed, they can reward themselves on the ‘Cheat Day’ for a job well done.

The ‘Cheat Day’ is important because it can be very tough doing workouts and eating protein powder without a break. At some point of time, you will basically give up and start eating everything you like. 

Similarly for spending money, if you suddenly stop spending on all your ‘wants’ without a break will be very tough. You may eventually give-up and splurge much more than you should.

Balance is the key.

The goal is to give yourself a small reward once a while to keep your spirits up and prevent an uncontrolled splurge later.

Here is what you should do:

  • Set aside a very limited amount of money in your budget for these treats. I will usually set a maximum of my 5% income on these treats.
  • Set aside these ‘spurge money’ on a separate bank account, which you will not feel guilty when you spend any of them.
  • Find cheaper alternatives to expensive desires. If you love going to SPA, probably you can consider to take a bubble bath at home instead. If you love to drink StarBucks coffee which cost $7 a cup, consider making your very own blend of coffee instead which may cost less than $1 a cup.

My Takeaway

Tips on Spending Money Wisely

  1. Set a Budget
  2. Plan Your Purchase
  3. Avoid Impulse Purchase
  4. Make Your Own Decision
  5. Pay Purchase In Full
  6. Buy at Sales and Discount
  7. Reward Yourself

Here are some tips on how should you spend your money wisely. Learning how to spend money is just as important as how to earn money. Spending more than what you have will lead to very bad financial situations which you may want to avoid. On the other hand, spending wisely will allow you to have more left in the end of the money for you to invest and plan for your future.

Home budgeting and proper planning is the key to spending money wisely.

Remember the future of your personal finance is in your hands.

Here are some resources what will help in guiding you to your success.

What guides me in my journey are some of the many books I read for the past years. There also many words of wisdom said by those who have achieve what we want to achieve and to learn from them is the shortcut to our goals.

Taking your First Step is always hardest, But it is the Most Important Step to Greatness

Smarter Everyday Library Smart Toolbox

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Disclaimer: I am not your financial adviser or lawyer, information found in our website are just my opinions and should used for entertainment purpose only. You should always ask your financial adviser or lawyer for any financial or law related advice.

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