It’s easy to stick to your existing habits when it comes to spending. People are funny about their money: some folks will save a ton of money on groceries, only to go out to dinner and blow that money they just saved on a single meal. Other people are unlikely to ever touch their savings accounts, but they’re quick to spend their checking down to the last penny. Here’s how you can break bad spending habits and prioritize savings!
Breaking Bad Habits
Make a Budget
Make a proper budget. Really sit down and critically examine each and every dollar you spend and save. This is important, whether you’re retired or still working. It’s critical that you have a good understanding of where your money goes, as it helps you see where you can tighten your belt and find more ways to save. Seeing your spending in black and white helps you budget more accurately and makes saving much easier.
Pay Off High-Interest Debts
Don’t juggle credit cards like they’re all about to come crashing to the ground. If you’re carrying a balance from month to month on any credit cards, it’s time to stop buying on credit altogether. First, pay down your highest interest debt. Hose it down with as much extra money as you have available. The budget from earlier is useful here, as it shows you how much extra you have free to do this.
Once your highest interest debt is gone, move on to the next. Don’t resume using your credit cards at all during the process: when you’re done, you’ll have saved yourself a lot of money in interest fees.
Saving in Round Numbers
Humans are weird. We like nice, round numbers, like five and ten. If your employer offers to match your retirement savings up to 6%, don’t just stop at 5% of your paycheck because it looks nicer. Get that extra 1%, as it could result in thousands of extra dollars in your savings account when you retire! Maximize your savings potential and forget about which numbers “look good” in a statement.