Are you tired of constantly spending money on unnecessary things and seeing your bank balance dwindle down? It’s time to take control of your finances and stop overspending. With a little bit of self-discipline and some mindful spending habits, you can save more money than you ever thought possible.
You certainly aren’t alone in looking for ways to spend less money and stop wasting money on unnecessary things, but identifying what those things actually are is harder than it sounds. Therefore, you need a plan and a way of reporting your typical spending habits in order to start making changes and cap compulsive spending.
Tracking Your Expenses
One of the best ways to stop spending money on unnecessary things is to track your expenses. It may seem like a tedious task, but it makes all the difference, and here’s why. By knowing where your money is going, you can make informed decisions about your spending habits and find areas to cut back on luxuries and items you can do without.
The best way to start tracking your expenses is by creating a spreadsheet in Microsoft Excel or Google Sheets. Make a list of all your mandatory monthly bills such as council tax, mortgage, energy bills and water bills (for example).
Include your food shopping for the month and split it out as much as you can. Identifying non-essentials and treats will only help towards those extra savings further! Sweets, chocolate and snacks soon add up so cutting back on some treats will help towards saving the most money possible.
Lastly, make a separate list of luxury essentials and treats such as your phone bill, car insurance, new clothing, socialising events and anything related that you can live without but would consider essential to your social lifestyle. You can use the same spreadsheet just give yourself some space between the columns (example layout below).
Identify Your Spending Triggers
We all have certain triggers that make us want to spend money, whether it’s a sale at your favourite retailer or scrolling through your social media feed. By identifying these triggers, you can stay focused on your financial goals and avoid temptation.
Take a step back and think about what triggers your spending decisions. Once you know what they are, you can take steps to avoid them and stop spending money on unnecessary things. If you’re stuck on where to start, ask yourself this: “What grabs your attention when you spend online or in-store”?
Is it social media adverts for discounts on fashion or maybe emails that promote seasonal sales? The answer most likely will be related to some of these areas as we live in a world that heavily promotes savings giving you the concept that it’s not as expensive as it could be!
Unsubscribing from marketing emails, avoiding going on shopping sites or taking some time away from social media might be a good idea if you’re serious about building up your savings pot and going cold turkey!
Assess Your Income and Expenses
Creating a working budget can help you stick to your financial goals and save more money in the long run. Take a little time to assess your income and expenses, and set a realistic budget that you can stick to. A little planning can go a long way when it comes to managing your finances.
You can use the monthly spending spreadsheet as a template to create your new target spend which will then give you something to work towards. It’s also a good idea to assess your bank’s budgeting features via your personal online portal and mobile apps.
Some banks have better visuals and calculators for reporting your monthly spending so it’s worth doing your research and seeing if there’s a better bank out there for you. For many people, interest rates aren’t going to be life-changing so focusing on reporting features instead and budget calculation features provided by the bank should, in theory, help you on your journey.
Starling Bank is one of the best banking apps for managing your spending based on our personal experience. It’s FREE to open an account and you can easily switch to Starling from your existing bank if it looks like a good match for you. The Budget Planner is excellent for splitting out your income, expenses and additional spending in very user-friendly charts and graphs.
Stick To Your Budget
Once you’ve created a budget, it’s important to stick to it. Set limits for yourself and ensure you can afford all your monthly expenses. If you’re tempted to make a big purchase or spend money on something you don’t need, take a step back and ask yourself if it’s worth it and do you need it.
‘Want’ and ‘Need’ are two different kettles of fish. Remember, staying focused on your financial goals is the key to success in this challenge. You can always look to reward yourself at the end of it with a holiday or something personal to you and your family.
Just remember that you’re not dealing with someone else’s money, it’s your own hard-earned so treat it with respect and value your time and effort towards making this lifestyle change.
Just when you think “We’ll have that another night, let’s get a takeaway instead”, depending on how many you’re catering for, that’s anywhere from £25 – £50 for most households which could be better spent elsewhere.
Change Your Mindset – Learn To Delay Gratification
Delaying gratification can be a powerful tool when it comes to saving money. Instead of giving in to the temptation to spend money on something you don’t need, focus on the long-term financial goals you’ve set out.
Ask yourself if the purchase is really worth it, or if you can live without it. A little self-discipline can make all the difference but don’t cut back if you believe your quality of life and health could be affected by this. For example, nutrition and a healthy lifestyle are very important so don’t cut back on things like fruit and vegetables as part of a balanced diet.
Focus on luxuries and treats you can cut out like Starbucks coffee, clothing and accessories, takeaways and expensive new smartphones when yours is perfectly fine for another couple of years! That’s where things start to add up considerably.
Many of us are victims of a cheeky Starbucks every now and then which can soon add up I’m sure you’ll agree. Why not make your own hot chocolates and coffee during your saving period and cut back on luxury nice to haves? You can always make ‘fakeaways’ in the air fryer and get creative in the kitchen on a budget.
Focus On Long-Term Goals
One of the best ways to stop spending money on unnecessary things is to focus on your long-term financial goals. By this, we mean saving up for a down payment on a house or paying off your debt, having a savings goal in mind can motivate you to save more money.
Remember, every little bit counts, and staying mindful of your spending can help you achieve your financial targets. If you can focus on paying your car finance or mortgage off quicker, just imagine how much more spare cash you’ll have.
Over 80% of 40+-year-olds in organised surveys say they wish they hadn’t spent so much money on luxuries when they were younger and should have focused on their financial well-being and savings more.
That’s not to say you shouldn’t enjoy your youth by the way! Of course, you should. Just consider if the future you may tell yourself off for that impulse buy or online order that turned out to be a waste of money as we’re all guilty of it from time to time.
Owning your own property is top of the list for many people as a huge amount of money goes towards living accommodations. If you can work towards paying a mortgage off quicker then you’ll be much more comfortable later in life.
Reduce Your Fixed Expenses
Reducing your fixed expenses can be a great way to save more money each month. Look for ways to cut back on your monthly bills, such as cancelling your gym membership or renegotiating your phone bill. By eliminating unnecessary costs, you can put more money into your savings pot.
Gyms are great for getting out of the house and exercising which is a good way of staying in shape but they are also quite expensive these days. Could you trial FREE alternatives for a while like walking, public running, working out at home and bike riding for example? These are FREE to do yourself so it’s worth considering.
Many of us have phone contracts that have since surpassed the usual 24 months yet we are still paying a high monthly rate that has rolled over. Switching to a SIM Only plan is a great way of cutting down your expenses which can save you hundreds of pounds a year.
Eliminate Unnecessary Expenses
Identifying and eliminating unnecessary expenses can make all the difference in your finances. Whether it’s cutting back on eating out or making a shopping list before you go to the store, little changes can add up to big savings over time. Remember, every penny you save on unnecessary things is one you can put towards your end goal and savings pot.
Subscription services like Amazon Prime, Netflix and similar all add up. Ask yourself if you are benefitting from them or not. If not then get rid and save yourself some money. If you add up all your luxury expenses which are for entertainment and lifestyle you’ll be surprised how much goes out of your bank each month on these.
Also, make sure you’re on the best energy tariff and have a water meter installed. Millions of households are still overpaying for energy and water so it’s best to check if you can reduce your expenses in these areas. If you don’t have a water meter, get one! By installing one you’ll save around £30 per month as charges without one are based on local average usage.
Look for Discounts and Deals
Finding discounts and deals are a great way to save money on things you need, and sometimes even on things you may want (if your budget plan allows it). Look for coupons, promotional codes, and seasonal sales to save money on purchases.
You can also sign up for loyalty programs or newsletters from your favourite stores to receive exclusive offers. Just be careful not to get drawn into offers that you don’t need and fall victim to impulse buying. As we mentioned earlier, if you already receive lots of emails it might be worth having a clean-up so you only receive the ones you need.
Top tips: Pay with reward apps on your weekly food shop to work towards discount milestones and money off your future shop. Tesco and Lidl have user-friendly apps which clearly track your trips each time you visit the store and help work towards vouchers and cashback.
Iceland and Ocado are very good for online food and grocery shopping as they have a sensible minimum order value for next-day delivery and often run appealing discounts. This will also cut costs on fuel expenses and avoid general distractions when visiting the stores in person.
Trail A No-Spend Challenge
If you’re serious about saving money, consider starting a no-spend challenge. This means committing to not spending any money on unnecessary things for a set period of time. It may be difficult at first, but you’ll be surprised at how much you can save by simply cutting out unnecessary spending.
Challenging friends and family can also be a fun way of encouraging one another and standing a better chance of success when you are under pressure from others. We are natural-born competitors in life so why not turn it into a game? You can come up with fun forfeits for anyone who slips up and orders a takeaway for example.
Be honest with each other though and communicate via WhatsApp in a group chat for example. ‘The No Spend Challenge’ – members have to list their luxuries each week (if any slip-ups have been made) then the group decides the losers forfeit!
Cash Vs Credit And Debit Card
Using Cash instead of Debit and Credit cards can help some people stay on track with their budget. When you physically see how much money you’re spending, it can be easier to resist temptation and stick to your financial goals. Plus, you may avoid the risk of overspending and accruing debt.
Some people abide by this daily and many of the older generations like to deal with cash as it’s more traditional to their upbringing. It does however have some drawbacks and you risk losing money and being unable to claim anything back via your bank.
However, with banking advancements and clever app features many will argue that digital payments are a better way to manage your expenses but the argument of not being able to see the money being handed over can cover up your physical spending habits sometimes.
One for you to decide on that but both methods have their strengths and weaknesses. If you feel like keeping hold of your money and handing payments over traditionally will help you then try it. If you are comfortable with digital payments then stick with it and monitor your banking app closely.
Stay Active And Engaged In Your Finances
Staying active and engaged in your finances can help you stay on track and motivated. Check your bank balance regularly, update your budget as needed, and stay focused on your long-term financial goals.
By staying involved in your finances, you’ll be more aware of your spending habits and be able to make better decisions about your money. Setting up daily, weekly and monthly notifications from your bank is a great way of keeping up to date with your money when you are focused on the day job.
Take advantage of savings accounts and lock in your savings where possible with your bank to avoid unnecessary spending. Working towards an end goal and achieving your target is extremely rewarding for many who successfully complete the challenge.
Saving money and changing your spending habits may seem daunting, but with a little effort and some mindfulness, it’s completely possible. By analysing your spending habits, creating a budget, changing your mindset, cutting back on unnecessary expenses, and finding ways to save more, you can achieve your financial goals and build a better future for yourself.
Remember, every little bit counts and small changes can make a big difference in your finances for the next month and the month after that. Certain people require a different approach to budgeting, but for many, following these steps will certainly help you on your way.