“All things in moderation” is a maxim both ancient and intuitive. Unfortunately, for most of us, achieving it in life (despite its popularity among advice-dispensers) is a difficult goal. Whether it’s Netflix, sex, food, or your spending habits, balance is tricky.
For some, the most difficult part of maintaining balance is maintaining a balance, the kind found in a bank account. And part of having money, of course, is knowing how to manage it. Here are five tips you can follow to reset your spending habits so you’ll have more cash in the bank and less stress on your mind.
Be aware of why you’re spending.
First, it’s important to distinguish between what many would call “retail therapy” and compulsive shopping. It’s true that some purchases are benign morale boosters meant to soften tough times. (Some research has suggested that during economic crises, women are more likely to “splurge” on small items like lipstick that provide a sense of enrichment without amounting to actual big spending—a phenomenon referred to as the lipstick effect.) It’s also true that some people have an addiction to buying things, a compulsion that requires professional help. But for many, making ill-advised purchases is neither benign nor an addiction: it’s emotional, mindless spending that can be overcome by identifying the source of your impulse to buy, then coping with those root problems in more constructive ways. You can help yourself to stay on track, for example, by practicing delayed gratification and limiting your exposure to advertising.
Plan for the worst.
It’s worth noting that some people, counterintuitively, feel more compelled to spend money when they are quickly running out of money. But it makes sense. Scarcity can stir up in us the primal sense that we must hoard while we still can. And then there’s pure denial, that impulse to delude ourselves about our grim financial futures until things getter better. But this kind of irrational thinking is costly: when you’re dealing with money during a financial crisis, you have to keep your eyes wide open. Don’t assume that you’ll get that job, that promotion, that bonus — budget for the income you have right now. If you have trouble sticking to a strict budget but a strict budget is precisely what you need to make it through a rough financial patch, try training yourself by keeping specific cash allotments in labeled envelopes—a method money expert Stefanie O’Connell calls the “cash envelope budgeting implementation tactic.”
Set long-term goals and keep them in your mind.
Saving and investing are significant components of keeping your finances robust. If you’re thinking of these things, well done! This is likely an indication that you aren’t living hand-to-mouth and that you have a steady income. Do you want to save a certain percentage of your paycheck for an end-of-the-year vacation? Make a small investment and watch it grow for the next five years? Great! Take these actions now — a direct deposit into a savings account, or buying a stock—but be sure to write down the long-term financial goals these decisions are associated with. Keeping these goals somewhere visible, and at the forefront of your mind, will be helpful when considering smaller day-to-day decisions.
Memorize these numbers: 50, 20, 30.
Financial health means being selective about where you spend your money. Prioritizing basic living necessities — like healthcare, food, and shelter — is a given. You’ll also want to invest in what will bring you lasting satisfaction like, as research suggests, experiences over things. And, for the sake of your future, you’ll want to save. But how do you organize all of it? If you don’t already have a set plan, something basic to start with is the 50/20/30 rule: divide your income so that 50% of it goes to essentials, 20% goes into savings, and 30% goes to personal spending. This plan provides you with structured autonomy.
Reward and punish yourself.
There’s no way to get around it. Just as accomplishing any difficult task—running a marathon, exercising regularly, completing a book, losing weight, getting through a single workday—requires you to do things you don’t always want to do, budgeting requires you to practice discipline. You can try to make things easier for yourself by following the above advice, but understand that you can’t rely on saving money to feel natural or pleasurable all (or most) of the time. So you spent double what you were expecting on an evening out catching up with an old friend? Fine! But skip the happy hours next week. Did you achieve your savings goal for three months in a row? Congrats! Splurge, but do it on something small. Maybe lipstick?