Personal finance tips and advice on money and investing to increase your financial intelligence and welfare

Tips On Curbing Bad Spending Habits

It is believed that around ten million people in the United Kingdom have debts of some kind. People can find themselves owing money for a variety of reasons from something as simple as missing a mortgage repayment to something as serious as redundancy or not being able to work due to illness.

shopping woman

One of the biggest contributing factors however, to many people’s debt is simply overspending whether it’s enjoying a lifestyle you can’t afford or buying up big at Christmas. In order to stay in control of your finances it is important that your outgoings do not exceed your income. This rule can be very difficult to follow if you are unable to earn enough money to cover all of your necessary spends like rent or mortgage, utilities and council tax.

Working out a detailed budget is the first step to facing your financial reality and regaining control of your finances. However, there are some simple tips that can be tried in order to reduce your general spending and therefore decrease any monthly shortfall you may have.

Logging your spends

Logging your spendsWorking out where you are going wrong with your finances can be difficult unless you keep an accurate log of your spending. It is often the small purchases of a couple of pounds that add up throughout the month to a surprising amount. For example, spending £2 a day on a takeaway coffee may not feel like much when you are spending it, but over the course of a year, your daily coffee will have cost you £730.

By tracking your spends you will be able to see patterns and work out exactly how much your lifestyle is costing you. How you go about doing this is down to personal preference. Some people prefer to keep a notebook and pen with them so they can note down their spends as they go along, while others prefer to keep their receipts and add the figures to a spreadsheet at the end of the day. Once you have an accurate picture of where your money is going you can formulate a plan for reducing or cutting out the unnecessary expenditures.

Develop a banking system

Shopping aroundKeeping all of your money in one place can lead to confusion as you may spend from your account without realising that you have a direct debit that needs to come out the next day. Fees for unpaid direct debits can be expensive and could worsen your financial position.

One way around this is to split your money up into separate ‘pots’. These ‘pots’ could be actual containers that you keep cash in, or you could sign up for an online basic bank account that allows you to keep virtual pots. On pay day, calculate exactly how much money needs to stay in your main pot to cover the monthly direct debits and transfer the rest to another pot. Next, make a list of all of your expected irregular expenses throughout the year, like car tax, MOT costs, Christmas presents and birthday presents. Divide this total by twelve and transfer that amount to a separate pot. You can then work out how much you need for monthly spends like food and entertainment and move this to yet another pot. Anything that is left can then be put towards debt repayments or savings. Using this method can stop you overspending as you are only allowed to spend from the designated allowance.

Shopping around

Develop a banking systemAnother simple way of reducing your spending is to make sure that you are always getting the best deal and value for money. You can use online comparison sites to make sure you are getting the best price for services like your utilities, mobile phone, television packages and even your groceries. While some of the savings may seem small, they can all add up to a much more significant sum. Likewise take on board grocery shopping tips that help reduce your food spend, like not shopping when you’re hungry, write a list and stick it and only shop once a week. Try browsing through charity shops instead of High Street stores. Tell your friends you prefer nights out to be cheap and cheerful or suggest a games night and other ways to spend the night in.

While these tips might seem like small changes, when combined over time, they begin to add up and will eventually help you to regain control of your finances and curb your bad spending habits.

About the Author: This article was written by William Masters in association with the financial service provider and online banking expert eccount money. For news and updates on products and services please follow Eccount.com on Twitter. William Masters is a finance journalist based in London who has established himself within the industry as a top contributor on topics of international economics and personal finance.

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