Like a lot of problems in personal finance the ways to control spending are almost unlimited; the reason being all of our circumstances are unique. Our personalities are different, our families are different and our priorities and goals are different.
The why of better control over your spending is really important to where you focus the cuts and how well you will stick to it. We aren’t going to go into goal setting here, that will be for another article, but don’t gloss over it. In particular if you need others to be on the board with the process, their buy-into the process directly correlates to their buy-into the goals.
But onwards … three ways to control your spending.
Stop Using Credit Cards
This one is first as its the easiest and quickest one to do, but might be the hardest one for you. It was for me. As I mentioned in our article Control Your Spending, I loved my credit cards … or more accurately, I loved the points I earned from them. But stop it! If you are spending too much money, if you too much month left at the end of your money, credit cards are not helping!
Yes yes … you can use the points for what ever thing you like to collect. Air miles, amazon shopping, supermarket shops, petrol, etc etc. I know, I’ve been there and had the same discussions, ok largely with myself, about why putting as much spending as possible on credit cards makes “sophisticated” financial sense.
But it doesn’t, and we all know it. You can do a quick “google” about spending more with credit cards and you will find a long list of articles covering this very topic. The guys over at nerdwallet have a good article on this, worth checking it out.
Cut the Subscriptions
Next, get stuck into that long list of subscriptions … some you had even forgotten about. Again, I’ve been there and done this. Magazines and newspapers were my thing. But when I went through and did this exercise I realized in so many cases how my interests had either changed, that “special introductory rate” had long gone or I didn’t even know I was still paying for subscription Y. In particular the online subscriptions can get you as they seem to be more easily forgotten about.
But its time. Make a list of all the subscriptions you have a get chopping. I’m not suggesting you get rid of all of them; we still enjoy our Netflix and Amazon Prime. But if things are bad, perhaps even those you do use may need the chop … if only for short period of time while you get things under control.
But this process has two parts to it. One, cut those subscriptions you are not using or “needing” any more. And two, trim the ones you want to keep. For example, your cell phone bill. Yip, that is a subscription too. But are you on the best deal? Are you really using all of those minutes and data? Perhaps you are but there are better offers elsewhere; and with sim-only deals you take the phone with you. Perhaps you don’t really “need” the latest iphone. It doesn’t mean you can’t have the lastest iphone, but just not right now. Get the spending under control, cut where you can, then later we can come back to some of things you may like to have.
Get on a Budget
I left this one to last as this is one most of you won’t do. I didn’t … I put this off for years. Even when I started on Dave Ramsey’s baby step program, I didn’t do the budget process. Oh I wrote a monthly budget … but I didn’t really use it. It wasn’t part of our family’s financial planning.
But this is the one step that actually will generate the biggest difference in your personal finances. This is the one step that will change how you see money, how you see your financial future. The one step that will give you a feeling of control over your finances.
It sounds all very fluffy … I know. But since being on a monthly budget process, month-in, month-out, for the last four years it has made the biggest difference for our family’s finances. I think a separate article here will be better because what the budget process brings is non-financial benefits to a family. It brings them closer together because they have to talk about the non-money stuff. Talk about goals. Talk about priorities. And these are the things that a good, simple, money plan (aka a budget) will help support.
And that is it! There are many ways to control spending, but these are our favorite three. They worked for us and over time, looking back, I say they are the top three in our family.