How to Control Spending
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How to control spending? Deborah Jones from CPAJones explains how.
Question: I am constantly struggling to control my spending. I seem to never have enough money to pay my bills due to my overspending in the various stores. I stress about not having the cash for my bills so I use my credit cards to pay for my coffee and groceries. Do you have any suggestions on how to get back in control? – Brenda
Answer:
We all love to buy stuff. The problem is that most of us buy and pay “the price” when the bill comes. The price is often high – in stress, guilt, anger, embarrassment - not to mention the actual price of the coffee or groceries when you put it on a credit card at high interest rate.
So let’s get started on a simple three-step process to change your point of view from “overspending” to “freedom to spend”.
First step: set up a separate bank account that is a “free” checking or savings account with a debit card.
Second step, using online banking, you can set up an automated transfer to this account of say $50.00 per week. Now you have the freedom to spend $50.00 on what ever you would like. No guilt or other stresses; only freedom to spend your $50.00. Remember this account isn’t tied to your bills account so now you have a clear separation of cash for each purpose. Warning, please check with your bank to ensure that the debit card feature will deny you if you overspend otherwise it will not achieve our desired results.
The third step in this process is very simple but not easy because we need to figure out the correct amount we can spend and still pay our bills. Is $50 the correct amount for you personally? That is why is so important to create a monthly (or yearly) household budget or cash flow – to allow you the freedom to spend and enjoy your money.
If you are low tech just remove $50 a week from your bank account in cash and put it in an envelope. When the cash is gone- it is a very visible way to control your spending. Also, with the envelope approach you can track what you purchased by saving receipts or by writing what you spent on the outside of the envelope.
Happy Stress Free Buying!
Deborah R Jones is not your typical CPA. She has been helping her client in defining and implementing their own dreams/goals through her financial planning packages since 1995.
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4 Responses to “How to Control Spending”
hey!
i just saw your site via a comment you left on lifehacker.
i’m just starting to really keep a tight budget, and am glad i found this site. i used to be very very careful about my money, but i’ve since become very lax about my budget. “I make enough, so i don’t have to worry.” really, it’s been a “I don’t want to take a look at what I owe, or how I’m living.” It’s all about building and gaining awareness.
I thought you should know about http://mint.com - it helps you keep track your spending and budget, and links your online banking, savings, loans, and investments.
through mint.com, i was able to see how much money t-mobile was charging me (something i did not see on my own bank account). because mint.com breaks down your expenses by category. automatically.
i actually got over $800 back from my phone bill.
talk about awareness….
By
Jaki Levy (Who am I?) on Aug 4, 2008
Hi Jake,
Thanks for the comment. I find mint.com very interesting. Thanks for sharing this info.
Cheers!
Sam
By
moneyexpert (Who am I?) on Aug 5, 2008
Check out http://www.gettoitbudgetbook.com for an easy solution to getting bills and spending under control. It’s a system that was developed for and is effective for budget-resistant personalities.
By
Cheryl (Who am I?) on Oct 23, 2008