It isn’t uncommon knowledge that many Americans have a spending problem. In fact, research from 2019 shows that the average American spends almost $18,000 on nonessentials alone.
You might think that because of the pandemic, people are spending less—but nearly 1 in 5 say they’re spending more now than before the coronavirus outbreak began.
In other words, people are using stress-spending as one way to cope. However, that obviously isn’t the smartest idea when it comes to personal finances.
If you’re guilty of stress-spending yourself, here are 3 ways to help curb your nonessential spending habit.
Everyone knows that they should make a budget and actually stick to it, however, the majority simply… don’t. You might keep a visual in your head about how much you should be spending each month, but the thing is, that isn’t enough.
What you need to do is actually write it down. Write down your essential spending needs for each month and make sure that you’re able to meet those obligations while still having enough left over to save up in case of emergency.
The truth is that even if you write down a budget, it can still be hard to avoid making an impulse purchase. Because of that, you should ask yourself this every time you consider buying something you don’t really need: Do you need this, do you like this, or do you love this?
If it’s something you need, then of course you need it. If it’s something you love, then it might have lasting value. But if it’s merely something you like, then you should try to avoid purchasing that item for at least a few days. You might discover you really didn’t like the item enough in the first place.
Part of your monthly budget should include the ability to save up money. You should have between three and six months’ worth of emergency savings, so set it up in an account with a good interest rate. To help you get into the right mindset, you should think of this expense as paying yourself.
Another thing that can help is to automate, automate, automate. Set up your banking account where a set amount of money, or a certain percentage, is automatically transferred into your savings account each month. You might be surprised at how quickly your savings can grow when you aren’t making a conscious effort to manually transfer money each month.