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Last week, I suggested that most likely, your entire budget isn’t out of whack. There are probably one or two (maybe three) areas of your budget that are causing your checking account to bleed cash.
To stop the hemorrhaging, we need to first identify your problem categories of spending and for this, I like to use technology. If you don’t currently have a budgeting app that connects to your checking account and credit cards, it’s time to download one on your phone.
I recommend using Rocket Money. I’ve used this (nearly) free app this past year and it automatically categorizes all of my expenses. YNAB (You Need a Budget) is also a great app to consider.
Once you have categorized your expenses, take a look at your categories of spending. Is there a category or two that seems way out of whack? What are you surprised by as you look at your categorical spending? Are your groceries higher than you thought they’d be? How about your Amazon purchases? Is there a specific store that is far too convenient for your retail therapy?
Today, I want to give you the first of three techniques I have used to correct problem areas of my budget.
I don’t like to admit this as a man, but when I get bored, I’ve been known to participate in a little retail therapy. I’m the sort of person who is susceptible to an impulsive buy if I have spare time and so, I’ve had to practice what I preach more often than I’d like to admit.
One of the most effective ways of curbing retail therapy or impulsive online purchases is what I call the 24-Hour Pause.
When I am feeling bored or prone to an impulsive online purchase, I wait. If those two words didn’t just stop your heart, then you probably don’t suffer from making impulsive purchases. But for those of us who do, waiting is purgatory.
What I have found is that in the 24-hour waiting period, my excitement for that particular item will almost always wane. What was once a “have to have right now” becomes a “maybe I’ll get it later, but probably not.”
It is amazing how much money 24 hours has saved me.
The next time you feel the urge to purchase something online or swing by your favorite store on a whim, practice the 24-Hour Pause. If you find that after 24 hours you still want that item and you have room in your budget, go for it! But if not, you just stopped the bleeding from your checking account and are on the path towards financial health!
Next week, we will further expand upon these techniques of recognizing and stopping the problem areas of spending in our lives with my technique for when you find yourself lacking the will power to say "No." Sometimes we just need a little extra help to control our spending and move towards the financial future we desire.
Until next week,
Zach Santmier
Zach Santmier is the owner of Trumble Agency, Inc. and the author of the personal financial course, Increase. He focuses on helping families escape paycheck to paycheck living so they can freely pursue their ideal future.
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