The biggest financial pitfalls for most people happen in the areas of discretionary spending. Groceries, eating out, fun money and miscellaneous categories all fit into the discretionary spending category. It is important to control the amount you spend on these categories, because it can affect your budget and the money that you have. Here are five tips on controlling discretionary spending.
1) Switch to cash for these purchases. Once you have run out of money for the month, you quit spending. It will take discipline, but it will be worth it. You can end up saving a lot of money this way. In fact if you are consistently having trouble sticking to a budget this should help to solve your problem.
2) Often one big downfall is to have no money set aside for fun categories. It is like going on a diet. I know that when I am on a diet I crave sweets that much more because I can’t have them. I often end up bingeing at some point. If I allow myself one piece of chocolate a day, then I can stick to the diet, and I am better off. The same theory applies to your spending habits. You and your spouse should each have a small amount of money that you can spend however you want. I recommend using cash for this, because it will help you to stay within your limit.
3) It is important to track all of your purchases each month. You may be surprised to find out what area is your biggest weakness. Tracking all your expenses makes you more conscious of the money you are spending, which will help you to cut back on spending that is not necessary.
4) You should set up a waiting period for any purchases over a certain limit. This limit should be dependent on your income, and budget. Personally, a hundred dollars for one item, is a limit that I would be comfortable with. The waiting period can be twenty-four hours, or it can be a week. If you have an item that is going on sale, that you have been wanting, you may shorten the waiting period of a week.
5) Finally you should ask yourself if you really need the item. If you do not have extra money your wants may need to be put on the backburner for a short period of time. It is important you learn to distinguish between real needs and your wants.
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