One thing I’m often asked as a mentor, life coach and even business coach is how to curve one’s spending. When we want (or need) more money, there are generally two things we can do; earn more or spend less. I often talk (especially as a business coach) about how to earn more, but here in this article, I’m going to talk about spending less.
Here are my top 11 practical tips on how to curve your spending
1. Assess where your existing spending occurs
I know the term ‘audit’ frightens most people, so let’s ‘assess’ where your money is going currently. These days we rarely spend cash, so it’s often easier via a review of your credit card or bank statements. If you’re in business, then review your expenditure via your Profit & Loss statements out of your accounting program. You may see things that you somewhat knew, but perhaps don’t want to admit. High expenditure in areas such as fashion, hobbies, meals out, alcohol, cigarettes or gambling. You may determine you want to spend less in these areas – or not – that’s your choice. If you want to spend less, then I suggest that you first curve the things which are not in your best interest.
2. Review your subscriptions
Again, whether personal or business, we often find we are just paying out money time and time again and it may not be beneficial. These subscription services are not silly; they know that people will let a small subscription month after month just continue because it’s a small enough amount not to be bothered. The thing is that these items can really mount up. I know for example one family who has four subscriptions to TV services (Disney, Netflix, Stan and Prime). Ask yourself; do you really need all of these? Look at the little recurring things; they can really mount up over a year.
3. Credit cards
Credit cards are an easy way to spend money and often more than you need to or should. Sometimes we need them for emergencies (or business spending) but often they are being used unnecessarily to allow us to spend more than we should. Use a debit card for day-to-day items like food or fuel, but for your credit card, consider putting it on ice. Yep, freeze it. So, to use it, you have to wait a while for it to defrost as no, you can’t put it in the microwave to defrost, which is good; no quick buying. Also, on the note of credit cards, don’t just automatically accept the automatic increases; that’s potentially leading you to greater debt.
4. Use cash not card
Remember that a credit card is still real money. I remember when one of my children was little, he said to me “Mum, just put it on your credit card, you don’t have to pay for it.” Of course, that was a child’s perception but because we’re not handing over cash, we often do think twice about handing over a card. You might have a budget of say $50 a week for ‘discretionary’ (random) spending which is easier to control with cash; once it’s gone, it’s gone.
5. Do I really need this?
I still have this mindset when I go shopping; especially when looking at a non-necessary purchase. Years ago I got a sharpie and put ‘DO I NEED THIS?’ on the back of my personal credit card. Yes, even shop assistants would say it out loud and look at me in question. The point was it became a habit to ask myself that question. If I don’t really need it AND love it – then it stays in the shop and I walk out not spending.
6. Avoid shopping opportunities
If you’re really in saving mode, then avoiding shopping opportunities might be a great idea. Going on a shopping spree with friends can lead to spending more than you want; especially if the shop provides a glass of champagne. Naturally, avoid shopping under the influence of alcohol!
7. Leave online purchases in your cart
A lot of impulse buying occurs online; people see ads on their Insta or Facebook feeds and might get caught up in an impulse buy. Firstly, consider just putting it in a shopping cart but leaving it for a day. If you still want/need it 24 hours later, then fine, but if you revisit a day later and realise you don’t actually want it that badly, then that delayed gratification might just save you a few bucks.
8. Shop around!
Often you can find the same thing for quite a different pricing. Items are often cheaper online; I know that pricing for one stationery chain is about 50% more expensive than an online stationery store I use called Skout. A little bit of time in looking around can really make a difference, especially for items we buy frequently. The same goes for many businesses; where you buy products or services – do you go with what’s easy or do you counter price? Yes, your time (especially in business) is worth something, so be aware of how much time you spend saving a few cents, but if you’re saving hundreds (or thousands) then it becomes worthwhile.
9. Look for free options
It’s amazing how often there are free options. TV for example (if you’re willing to put up with some ads). Borrow Box is fantastic for listening to audiobooks, versus the $ 164-a-year paid option. If you still like real books, then using your library, versus buying a book you might keep for a couple of weeks and then ends up on a shelf somewhere. When you start looking, there are options for many free products and services.
10. Transfer to savings as soon as you’re paid
Setting a savings plan is a great idea. Again, whether business or personal, as soon as you’re paid, transfer a set amount to a savings account. What is left is then available to pay your bills, spend and use. Be disciplined and not dip into the savings. It’s even good to rename the savings account in your internet banking to say what the purpose is. That will be a reminder that the savings have a purpose. I also like having my savings with a different bank from my operating accounts; that way I don’t even see the money there and semi-forget about it. Even better, set up a recurring automatic transfer the day after you know your wage or payment is likely to go in. That way, you’re not even having to think about or action the transfer. A smaller amount, over many months really does start to add up in time.
11. Set up budgets
Now I know some people don’t like the word ‘Budget’ so instead of this use ‘Planning for Profit’ … it’s a great way to think about what you will spend and set some limits – personal or business. If you’re operating a business, then set up your budgets in your accounting program (Xero, MYOB, QBO etc) and then each month review the ‘P&L Budget v Actual’ to see how you went. When we are monitoring things and looking at them regularly, they remain top of mind. If you see a bad pattern forming, then you can action a chance and rectify the situation. If you’re not looking, not tracking, then things tend to just get out of control.
Hope this helps! If you’re needing any help with business coaching or life coaching, please reach out to me via Contact page – love to help.