How to break bad spending habits
Money! Money! Money! How can we stop the urge to spend you? How can we save wisely for the rainy day? You looking so delicious chilling in my wallet, and the demons are singing to me, telling me to eat you up, but I refused, I held my ground, I thought about the rainy day. What if I need money for an emergency, would I go begging?, would I take up a debt? No, I must plan my spending wisely incase I am in need tomorrow. Lol.. sorry for that, I couldn’t just help myself. Let’s go into the business of today. I would be suggesting some methods you can use to control your spending.
My sister, a medical doctor (who by the way makes way more money than I did during my Nysc as an houseman) doing her housemanship once asked me that Tolu, how do you control your spending? I always feel the urge to buy stuffs like hair, makeup, shoes and so on. I told her that yeah, I understand since she is a lady, but nonetheless, she should have a tight grip on her spending. What I told her was I simply lock the money up in my account and throw away the keys.
Thanks to my prudent spending, I was able to set up this website all from my Nysc alawee which is not much (if you don’t believe me, you can check online). Well enough about me, sorry for starting my need for drift, lol, let me go to the tips for today.
1) Make a budget: Yes, budgets are not only for organizations. it is advisable to make a monthly budget if possible. How do you do that? To explain, let’s start with the basics of what a budget is. A budget is a quantitative expression of a plan of action prepared in of the period to which it relates. In this situation, a budget would be a plan in monetary terms for future spending.
I started planning for the creation of my website while I was at Nysc camp. That was even before knowing the particular organization I would serve in or if they would pay me at all in the organization. This period was in June, and I was able to secure a position at Crusader Sterling pensions ltd. Luckily they paid me some allowance too, and I was able to set up my website at the end of October. So you see, it took me close to 5months of planning. At this time, I had already done my research on the best publishing platform to make use of. It was either WordPress or drupal. My problem with wordpress was that I was scared that sooner or later, the frequent updates would one day break my site. Drupal on the other hand was too complex for me , so I ended up choosing wordpress.
In the run up to building my website, I analyzed my sources of income which at that time was my Nysc allowance and the money from my place of primary assignment (Crusader Sterling Pensions). Then I listed out my possible expenditures which included the domain name ( I was going to pay for 5 years), the Genesis Framework, a child theme (Dynamik website builder) and quarterly apportions for SEO.
I matched my projected expenses with my projected income and was able to project a benchmark savings after I had deducted living allowances for example food at work and transportation. This budgeting made it possible for me to successfully run this website on my little allowance. P.s hosting was not included because I started out with Amazon’s Ec2 free tier hosting, but after having some issues with it, I opted for paid hosting with Siteground which has been fantastic so far.
So you see, budgeting is very useful in controlling your spending. Read more on budgeting.
2) Fix part of your money: If you are not half as strong as Jesus that resisted the devil 3 times after being tempted, then you can fix a substantial amount of your money in an interest earning account like a fixed deposit account, money market account or you can buy Government treasury bills. These types of accounts have a maturity date, which means that you cannot withdraw your money until the maturity date, or until you decide to sell it (treasury bills).
3) Avoid shopping triggers: If you know your weak point, and you know what would most certainly drive you to shop, you can block it or avoid it so as to reduce temptation to shop. My sister for example has a weakness in shopping. Anytime she goes online, she is usually drawn to ecommerce websites and this usually ends in a purchase. What we did was to block those popular ecommerce websites in Nigeria and only unblock them if and only if we want to buy a necessity.
4) Create a long term savings plan: Like I said under budgeting, it is advisable to create a budget that states your income, allowed expenditure, and possible savings. Then you must abide strictly by this budget and set a benchmark of savings that must be deposited into your bank account by the end of each month.
5) Be “cashmore” not “cashless”: In this sense, what I mean is that anytime you go shopping, it is advisable to carry cash rather than a credit card or debit card. This is because once cash is exhausted, there is no choice but to end the shopping spree and return home. On the other hand, the possibilities for shopping with a credit or debit card are endless. If you have no self-control, you may end up spending everything in your bank account in case of a debit card, or end up owing a whole lot of money in the case of a credit card. We don’t want that to happen right?
6) Track your expenses: You need to constantly monitor your spending and track your bank’s account balance. If at anytime you see a reduction in your balance for what you are not aware of, you should call your account manager to clarify it.
Alan Williams., Peter Jeppson., Money Mastery: How to Control Spending, Eliminate Your Debt, and Maximize Your Savings.