Seven easy ways to develop better spending habits

We’re inclined to improve our financial stability in four typical ways: we’ll keep a budget, save, invest and find ways to increase our incomes.

However, we tend to forget that how we spend our money greatly affects all these other aspects of financial wellbeing.

Here are seven simple ways to become better at using the money you do have.

1. Know what triggers you to spend – and avoid it

We all know someone who shops when they’re sad, or a friend who wants to eat out every time they’re too tired to cook.

Spending triggers are places, people or situations that make us want to either spend too much or spend even when we hadn’t planned to.

These triggers could be friends who prefer to hang out in places that are more expensive than you have budgeted for, or situations that force you to fork out cash.

Limit your contact with these triggers or look for alternatives that are less expensive so you can learn to stick to a budget.

2. Have someone keep you accountable

This could be a friend or spouse who’ll help you keep your spending habits in check.

Share your money goals with them, your spending plan and consequently, keep them in the loop before making any big purchases.

Accountability partners are important as they’ll remind you what you are working towards and keep you focused.

3. Resist avoidable upgrades

Most of us will want to move to a bigger house or get a better phone the moment we receive a salary increment or an annual bonus.

Analyse every purchase or lifestyle upgrade before you execute. Is it a must-have? If you’ve survived this long without it, why is it so important now?

Most upgrades will come with extra costs that will require extra spending. For instance, a bigger house means higher bills, a posher car will come with higher insurance costs, and a newer phone often translates to higher data costs.

4. Always look for alternatives

There’s always a cheaper option – you just need to find it. Make it a habit to always use the less expensive alternative that doesn’t compromise on quality.

For instance, fill your water bottle in the office whenever you need to step out rather than buy bottled water.

Drink your morning coffee in the office as well, if it’s provided; it would definitely be cheaper than buying a cup from a coffee shop. Eat out less, it’s more economical and healthier to cook at home and pack lunch. Try home workouts instead of paying for a gym subscription.

5. Create a spending plan and stick to it

A spending plan is a list of things you want to channel your money towards.

This will include recurrent expenditure like food, shelter and utilities, and other one-time expenses based on your priorities.

Put the items with the highest priority at the top of your spending plan, like rent or school fees. Be as exhaustive as possible so you’re not plucking things to spend on out of the air. And then make it a habit to spend on items on your spending plan only, and always prioritise whatever’s higher on the list.

6. Look for savings before you buy

Most stores have regular discounts and stock clearance sales. Look out for these deals and stock up when things are cheaper. Sign up for store email updates. This will keep you informed on when your favourite outlets have discounts.

And always do the math when shopping in supermarkets, and pick the items that are cheaper. You’ll often find it’s cheaper to buy something in a larger size than its smaller alternative. You can then store the product in smaller containers to avoid misusing it.

7. Always perform pre-purchase research

This mainly applies to big-ticket items, such as household electronics. The decision to settle on a vendor for these items should be informed by research on the prices offered by different stores.

Impulse buying on these items can cause you to miss out on better offers on the same product from other stores. Before spending big on items, compare prices, select a quality model and possibly find the best after-sales service and support. When you have the most information, you’re able to make the best decision and minimise buyer’s remorse.

The writer is an investments associate at Cytonn Investment.