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4 Spending Habits to Embrace in 2018

December 11, 2017 Francine Jones 0 Comments

Good spending habits are the foundation of good financial health. Developing those habits can take a lot of practice, and there’s no better time to start working on them than the start of the new year. It’ll take take for them to become second nature, but there are a few good habits that anyone can pick up fairly quickly.

Follow Your Budget

It is almost impossible to manage money properly without understanding how much you can afford to spend in each area. A budget will ensure that you allocate enough money to cover all of your expenses, including savings, before you start spending it on other purchases. It is the most powerful tool at your disposal for cutting down on impulse purchases and making sure that you do not waste any money.

Start your budget by making a list of all of your recurring expenses and subtracting them from your income. Once you have done that, subtract an additional amount to cover building an emergency fund. You can spend the remainder on whatever you like, but it is best to further break up your disposable income into categories so you can have a good understanding of how you are spending it all.

Use Cash

You can control your spending by using cash instead of credit cards. When you use cash, you need to take the time to count out the money and hand it over, whereas people who use credit cards can pay instantly. The slight delay gives you more time to think about the purchase and prevents you from buying things on sudden impulses. It also allows you to restrict the amount that you spend in one trip by limiting the amount of cash that you carry at any time.

Recognize Bias

Humans are prone to cognitive biases that marketing experts can exploit to make sales. For example, the anchoring bias causes people to think of the first price that they hear as the baseline for comparison, regardless of whether the price is good or not. Recognizing these biases will not make you entirely immune to them, but they will help you to think about why you are making decisions and give you a chance to recognize mistakes before you commit to them.

Practice Patience

Clever marketing can make you think that you need to get an item immediately, but that desire will often fade if you resist it for a little while. When you want something, you should try to take some time to think about it and make sure that it is really useful before you make the purchase. This cuts down on waste and clutter in addition to saving you money, which makes it one of the most valuable techniques to master.

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