At the core of almost all personal finance advice is this one foundational principle: you have to resist the urge to spend as much as you want. Without that discipline it is difficult if not impossible to reach any type of long-term financial goal.
Which is not to say that you can’t spend anything. It just means you have to learn when to say “No.” And that in itself is hard enough because it goes against our most basic instincts. As mammals, we are programmed to value immediate gains over potential future rewards. To be a successful guardian of your own financial resources is to overcome your own urges to spend money in the short-term. That’s one reason why many people fall into the debt trap (and have trouble climbing out).
So if you are on the verge of ruining your finances with an unnecessary purchase or simply want to learn how best to avoid getting into debt:
1. Learn how retailers hook you
You walk into a department store like Macy’s or even a grocery store, and without realizing it you’re subject to a thousand small cues that have been honed over many years for sole purpose of making you more likely to spend money. By learning and understanding these tactics, you can prepare yourself to resist that urge when you get inside the store.
One of the most common tactics is one we’ve all seen countless times – the use of temporary discounts and sales to provoke a sense of urgency. When you see a sign or sticker that says “20% Off This Week” they are hoping to induce you into buying now, even if you really don’t need it now.
Another technique many stores use is to put “impulse purchases” right near the cash register. These include items like gossip magazines and candy bars that you might pass up if you have enough time to think about it. But if they can tempt you in that final moment (as you’re checking out) they know there’s a good chance you’ll drop one into your basket at the last second.
2. Talk to yourself
In order to successfully reject these “BUY NOW” messages you need to pre-program yourself with your own positive frugal message. How to do this? Well, first visualize what it is that is driving you to be debt free and to build wealth. Is it your desire to provide financial stability to your children? Or your dream of owning a home one day? Or retiring early? Whatever your motivating desires, hopes, and dreams are you must use them to create your positive frugal message.
If you have real difficulty with the temptation to shop and/or spend money, you should write down your message on several different pieces of paper and make it specific – tell yourself why you are going to resist the urge to spend. It might even help to paste or draw pictures onto the pieces of paper to represent your goals. And then places these pieces of paper in crucial places where you will see them regularly. Put one in your wallet or purse, put one in your bedroom, etc.
That way, you will be able to stay locked into your goal and those things motivating you will never be far from your mind.
3. Remove your spending power
Another way to short-circuit your impulse spending is to remove your own ability to pay. If you have a habit of using credit cards too much, here’s what you can do: pour water into a cup and then throw your credit card in it and stick the whole thing in the freezer. Next time you are tempted to take the credit card for a spin, you’ll have to wait for it to thaw and that will give you plenty of time to rethink your impulse decision. Or if you want a more dry method, you can give your credit card to a loved one who you trust and ask that they only give it back to you if you tell them it’s an emergency. (For more tips like this, check out our Credit Card Debt resource center)
If you’re ready to get rid of your credit card altogether, then try switching to cash or a debit card. Either way, you won’t have the ability to buy anything with credit, so you’ll be more likely to avoid temptation. And with a debit card, you still have many of the same benefits as a credit card, such as rewards and the ability to track your purchases.
4. Learn to fill needs/wants with free/handmade items
Finally, you should start focusing on how to differentiate between your “wants” and “needs.” This is especially important at this time of year, when the holidays make us think about all kinds of things we’d like to buy. You need to begin replacing your “wants” for items like clothing, food, and electronic gadgets with more frugal pleasures.
For example, if you often spend money going out to eat at restaurants, redirect your desire toward finding some delicious and simple meals you can make at home. Appreciate the satisfaction of making a meal yourself, and ask a friend or loved one to join you in order to enhance the experience even more. Once you start replacing your spending urges with more frugal habits, you will be on your way to financial stability and wealth!
About the author: Benjamin Feldman is writer and personal finance expert at ReadyForZero.com, a free website that helps you organize and pay off your debt. You can find more of his writing at the ReadyForZero blog, where he writes about getting out of debt.
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