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Friday, December 10, 2010

Keep an eye on your regular spending habits

Even if you don't spend much time thinking about it, there's a good chance that you've picked up on your own spending habits. At least, if you spend a little time mapping them out in your head. You may think about how every morning, you go to the restaurant down the street before work and get a coffee and a Danish. You drive to work, sometimes having to get gas, and on those days, you get yourself a pack of gum to chew while you wait for the gas to pump. Then, you go to work, where you usually buy lunch out of a vending machine. You head home after that, sometimes picking up some groceries, and you make yourself dinner. On the weekends, you go to a bar or the movies, sometimes to a concert.

Not very exciting, huh?

But these are the kinds of habits that you can use to curtail spending, or to catch yourself when you've begun to spend more money than you may realize you're spending.

After looking at your spending habits, you may see that you spend an awful lot of money on coffee, and you're not even that big a fan of that restaurant’s coffee in the first place. Why not get a coffee maker, sleep in, and grab a cup of Joe on your way out the door? Sometimes, you may see how much you're spending and decide that it's entirely worth the money. You go to the movies a lot, but that's one of your favorite things to do, and you'd rather give up eating out during your lunch break at work than having to give up your hobby. Whatever the case may be, knowing what your habits are make it easier to see where all your money is going, and deciding if you like it to be going in those places.
The second, more subtle way, that examining your spending habits can keep you from over-extending yourself is in examining the way that you pay for these things. A lot of your everyday purchases are probably bought with cash. If you notice that you used to always pay with cash, and now you're spending credit cards, it's time to ask yourself why that is, and what consequences it has on your spending.

This self-examination is going to be different for each person, but it can be very illuminating. For instance. Let's say that you used to put 40 dollars spending money in your wallet each week. You consider this 'free money' or 'money to blow,' but at the same time, once that money is gone, you're out of luck, which forces you to consider whether or not you want something before you buy it. If you spend all 40 dollars on Monday, you have the rest of the week to be miserable without any money. But one day, you decide that even though you spent that 40 dollar, you'll just charge a coke on your card. This is the beginning of bad spending, especially if your old system worked.

Similarly, if you use cash to monitor your spending, using a credit card can make it very difficult to keep track of things. You can, of course, go online and see how much you've spent so far, but cash can make it very easy to know, without the help of the internet, a phone, or a bank teller, exactly how much money you have left.


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