Budgeting Tips - Understanding Healthy Spending Habits

By >> Lyn Bell 

Without understanding healthy spending habits it is all too easy to get into debt and very hard to get out of it. Financial health does not need to be one and the same as living without...and there is no need to fear budgeting. To understand healthy spending we need to know just what is bad spending.

Prepare your budget as a start, recording what is coming in and what is going out in the way of expenses. Analyse your accounts and establish where your money is going. Get a handle on your spending habits. Some of these habits can lead to debt and you need to recognise the sign before it becomes a problem.

Bad habit one: spending more than you earn. Perhaps you think this can't be possible but if you find yourself dipping into savings or using credit cards to pay for bills this is a sure sign. Beware, as before you know it your savings will be gone and credit cards debt laden.
Tip to help change this habit: carry a notebook with you and make a note of everything you spend. That is all purchases, no matter how small. This exercise usually is an eye-opener and you will be surprised at just how much you spend without realising it. With your list in hand you will know where you can make changes.

Bad habit two: 'robbing Peter to pay Paul' -- this is using debt to pay debt. You are likely to be paying fees to do this and all you really are doing is shuffling money about.
Your tip: your budget is very important to help you out of this habit. Be honest with yourself. Cover your essential expenses in your budget and look at making changes to those that are nice but not essential. Your loan payment are essential expenses.

Bad habit three: using your credit card when you know you don't have the money won't be paying it back.
Your tip: consider seriously if you need this item. Ask yourself: Is it essential? Can I do without? Can I get it second-hand? Can I borrow or hire it? Still need to get it? Save for it! Allocate funds in your budget towards the purchase of the item.

Bad habit four: only paying the minimum each month and continuing to use the credit card. Not only is your balance continuing to climb from uncontrolled spending but interest is adding each month and increasing. The minimum payment probably covers the interest and nothing more. Before you know it there won't be any limit left.
Your tip: STOP! Stop spending on the card, set a budget urgently and start paying more than the minimum required.

Remember that developing new habits takes practice and repetition -- not to mention budgeting. It is energizing to be in control of your finances and in time you will not only understand but may even learn to love your new healthy spending habits.

Lyn Bell has been in the finance industry for more than 30 years and is a Certified Financial Planner. She has helped many clients achieve their financial goals. Lyn invites you to receive a free report on ways to Cut Your Grocery Bill ...this will help with your budgeting.

For more on how to eliminate debt visit Erase Debt Now.

Please note this article does not contain specific advice and is for information/education purposes.
A disclosure statement is available free on request.

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