Prepare yourself for change
The first thing to do when trying to save money is pretty similar to the first thing you would do when trying losing weight - make a life plan that you can stick to. It’s a commitment, so you must be ready to make some sacrifices. If it were easy, everyone would be thin with money to burn!
Set goals
The next step on your financial diet journey is to figure out what makes sense for you. Weigh in, assess your spending habits and make a game plan. Where does your financial life currently stand? How strong is your cash inflow/outflow? Are there some upcoming expenses that you need to be saving for? Make sure you look at short, medium, and long-term goals-you need to be thinking about your full financial well-being, not just today. Planning is the key to any success. Just as you have weight loss goals, determine what you want to achieve financially. If you’re looking to purchase a car next year, how much do you need and when do you want to buy it? You can then work backwards to figure out how much money you need to save each month. If the amount seems a bit out of reach, you may find it necessary to revisit your goal. The fundamental principle here is simple: PLAN, SAVE MORE, SPEND LESS.
Be mindful
Healthy spending means making purchases in moderation—refrain from over-indulging when you’re going out for happy hour after work, or when you enter a store and see 50% off on all items. While you should take advantage of the sale, be mindful enough to buy only things you need and avoid buying just because things are on sale. Set your spending limits beforehand and stick to them.
Don’t give in to the craving
Sometimes we buy on a quick impulse simply because we are bored, just as we snack when we have nothing to do. This is a quick and easy way to quickly spend hundreds of dollars when you add it all up. Before succumbing to the craving, ask yourself this simple question: Do I really need this…or will it just wind up in the corner gathering dust?
Work it out
Being active makes weight loss much easier. Those who are active are more likely to shed a few more pounds. The same holds true with your finances. Be active with your bank account. Prioritize your spending. What are some things that you enjoy and don’t mind spending your money on? Is it traveling? Perhaps you have some new activities you want to try? Work those priorities into your budget and cut back in areas that are of less importance.
Treat yourself on occasions
When you’re on a strict diet, there will be special occasions that allow you to step outside of your nutritional plan. Celebrations for achievements, anniversaries, or reaching milestones are good examples. These are the times that you want to receive more than just a “well done”. More than likely, you’ll want engage in the festivities and treat yourself. With money, there’s no difference. The aim is to not totally deprive yourself of enjoyment, but rather to avoid making frivolous purchases on a whim. There’s room to indulge a bit, just make sure you make up for it another time.
Count those financial calories
If you want to lose weight, it is suggested you count your calories. The same concept applies to finances. Keep track of your expenditures using a check register or maybe an online money management program. Include your recurring monthly expenses and make sure you document what comes out of your pockets and bank account. This will not only make you more aware of what you spend, but will also paint a clearer picture of where you can save.
The downside of overspending as a habit is you get less of the things you need because you're buying for the sake of buying. Think of saving extra money at the end of the month as leftovers that could be spent on home down payments, savings, vacations or a budgeting shopping spree. If you do this, you'll lose 10 pounds of overspending in no time.