How to Limit Spending

It takes a little discipline but there are some things that you can do to limit your spending. These are some really good suggestions that we know have worked for other people and we hope that they will work for you as well.

Download Get Back in the Black app

Download the Get Back in the Black App and use the Where Am I Now module to see what your current spending looks like in See My Budget. The App allows you to enter and tailor your budget any way you want. Use the My Personal Debt Buster module to work out how much extra money you would like to put towards accelerating credit card and personal loan repayment.

Then use the Find the Money module to cut back on expenses of your choice and see the result in Review My Budget.

Track your spending promises and your reducing debt balances from week to week in Track My Commitment.

Save everything you earn and spend only what you need

Saving should come first, not last. It should not be the little bit, if any, that is left over after you have satisfied yourself with all spending. If you prioritise savings last, it means that in your mind, you are giving it the least amount of importance. It also means that you are ranking it below spending. Anything you place at the bottom of a list is the one least likely to get done.

Change your mind, turn it around and make saving your first priority. If you adopt the mindset that you save first and then all spending comes from your savings, you are ranking saving above spending. Also, it won’t take you long to think like Scrooge, where you resent spending anything more than you have to out of your savings.

Allocate money to various spending categories

Instead of winging it at the shops, and running the risk of making unplanned and unnecessary purchases, try allocating money to various categories of spending before you go shopping. If you are using the Get Back in the Black App, you will already be doing this.

Your categories will be:

• food & drink

• household bills

• communication

• transport

• health

• education

• entertainment

• personal

It makes sense to do this little bit of forward planning in line with your pay cycle. For example, if you are paid fortnightly then allocate your spending for the coming two weeks. This will give you a better chance of buying what you need and ensuring that you don’t overspend and cut into your target savings.

If you have worked your way through your Get Back in the Black App, you will understand exactly how much you need to allocate to each category. You can see how much you will need for bills each month, and how much you want to spend on food and groceries. For some, spending on health will be a necessity and for others it won’t. It depends on the levels of good health in your family. From there, it is up to you how much you want to save, or spend on discretionary purchases (i.e. things you want rather than need).

Understand and monitor your own spending behaviour

It pays to understand your own behaviour when it comes to spending. Your emotions drive your spending. Your state of mind and how you feel on any given day will have a large influence on how much money you spend that day.

If you are faced with a situation where you are likely to overspend or indulge in a habit or addiction, you need to be aware of what you are likely to do. You also need to be aware and be present in the moment, so that your smart brain can engage and allow common sense to override your ‘auto-pilot’ bad spending behaviour.

Bad money habits fall into seven (7) common categories:

1. The Dreamer

You are very likely to carry revolving credit card debt because you convince yourself that next month things will somehow be better than this month … with no grounds for that belief. You are also likely to buy lottery tickets regularly, dreaming of a windfall that will solve all your problems. The reality is that the opposite usually happens. The dreamer’s debt continues to grow as you ignore the consequences of overspending and fall into the monthly routine of unjustified super-optimism.

2. The feel-good spender

Spending makes you feel better. Your impulsive overspending could be your way of compensating for feelings of low self-esteem. If you don’t feel good about yourself, or if you are feeling down, an overindulgence in retail therapy can be your way of making yourself feel better (pause) …. until you receive your credit card statement that is. Then you beat yourself up as you regret your impulses. And then to make yourself feel better, you take your credit card on another shopping trip …. And so it goes on.

3. The financially disengaged

What will be, will be! You have no interest in managing personal finances, either today or into the future, hence you do not keeping track of spending and do not take responsibility for your spending. It is what it is. When the household finances get a bit tough, you seek the path of least resistance to cope. You have no second thoughts about using a credit card or personal loan as a source of income. Whatever it takes on the day … right? Wrong! … if your apathy will bite you hard one day, if it hasn’t already.

4. The money avoider

You may not admit it out loud but deep down you believe that you do not deserve money or that money is bad, and possibly even the root of all evil. So the less of it you have the better off you’ll be. It is common for people who always struggle to attract money or to keep money to develop this belief early on in life. This negative attitude towards money can be acceptance of your perceived lot in life. Of course, if you think this way it quickly becomes a self-fulfilling lifetime prophesy.

5. The revenge Spender

It goes like this “If he can be irresponsible, so can I” … and vice versa. For example, your partner loses $1,000 on the horses and your reaction is to go out and buy new handbag and shoes. You spend to get even; to teach your partner a lesson. You may have just doubled your debt but you make yourself feel better momentarily; without thought for the consequences.

6. The sneak

If you or your partner are hiding a narcissistic behaviour such as problem drinking, gambling, drug-taking, or having an affair; the spending typically remains hidden so that friends, family and the outside world can’t detect the secretive behaviour.

The sneak will commonly attempt to control the household finances so that the money-wasting spending and rising debt can be juggled and hidden. The sneak will often go to great lengths to cover their tracks by involving other people in some back door arrangement.

7. The status spender

You tie your identity and sense of self-worth to the amount of money you have, or don’t have. You constantly compare yourself to others. It’s your overriding desire to be socially accepted that compels you to ‘keep up with the Jones’s’ without the means to afford it. It should come as no surprise that if you have your sense of self-worth riding on the back of your perception of wealth, you could be in for a wild emotional ride.

Put an obstacle in the way of your own spending

To help control spending, make it a little more difficult for yourself to spend money. Set up your own intervention so that if common sense doesn’t prevail and your auto-pilot brain reacts with a repeat of your habitual bad behaviour, you have a fail-safe in place.

For example, use a debit card instead of a credit card. Have a savings account where you keep the majority of your cash that can’t be accessed by your debit card. Transfer a limited amount to a linked access account that is connected to your debit card.

Firstly and most important, by using a debit card you are spending your own money, not borrowing it as you spend. Secondly, by limiting your own access to money in your debit card account, you have already placed limit on your ability to spend before you set off to the place where you spend money.

Important … please read this!

What we presenting in this article is educational information only.  Our aim is to empower you to manage your own money and make better financial decisions.  The factual information presented here should not be regarded as advice.  All users of our services should seek their own independent advice about their personal circumstances.