How do you spend your money? Are you looking for better advice on how to spend your money? I always wonder if I could be better with money. I think that I’m pretty decent at it, yet I still foolishly blow money.
At my friend’s birthday last year I put the bill on my credit card and collected money from everyone. Guess what? This was a disaster because I now had all of this cash and I ended up spending most of it. Oops!
For some odd reason I found myself doing research on how money is spent and the idea of mental accounting. I was then chatting with a buddy about how it’s so difficult to save money in certain situations. This person is like me and spends a fortune on eating out.
I’m good with paying myself first, avoiding debt, planning for major expenses, and saving up. I totally suck with going out and eating. I just can’t help it. I can easily spend $20 a day on food without thinking twice.
Why do we spend money so irrationally?
According to Wikipedia:
“People behave differently when they are using credit card and cash. If they use credit card to pay for a bet, they will tend to bet larger than if they use cash. This shows how people uses mental accounting to treat money as if they are not the same when it’s in the form of credit card and cash.”
Hmm interesting. I’ve been using my debit/credit cards a lot lately. I use them because they help me keep track of my spending and I’ve never really been a cash person.
Let’s change how we spend our money!
A few weeks ago I presented my challenge to save $100 per month. We looked at all sorts of different tips for saving money.
My suggestion for saving some more money is to simply change how we spend our money in terms of actually spending it!
Have you tried this? Try going cash-only for a few weeks. See what happens. I usually notice a huge savings when I switch methods of payment. I’m not sure why exactly.
What are the benefits of using credit cards?
- You can track your spending.
- Earn rewards.
- Get protection on your money.
I love getting cash back at the end of the year. The other rewards are pretty neat. I also know that my money is being protected. With that being said, I’m not naive about it. I realize that at times I likely spend more money than I should because there’s no physical connection. I’m handing over a piece of plastic.This leads to an interesting question…
Is cash the way to go?
It could be. The physical connection makes it tougher to hand it over. That extra air freshener or car wash at the gas station isn’t so exciting now that you have to go pull out an extra bill out of your wallet instead of just swiping.
I’m going to try this. I’m going to go cash only with my main purchases for the next month.
I can’t change my automated payments to my credit card (gym, cell phone, insurance, and a few others). I can however change how I spend money on groceries and daily expenses.
How easy is it to save money?
Very easy. Even a switch to a free checking account can save you a few bucks. You can go out less often. You can stop drinking for a month (more on this soon). You can negotiate your gym membership or cell phone contract.
You can easily save an extra $100 a month. Don’t try to tell me otherwise. Excuses are not accepted here.
What about making money?
Making money is fun and exciting. However, there are finite hours in any given day or week that you can use to make more money. So if you can earn an extra $100 at least per month and save an additional $100, you’ll be ahead of the game.
How can you change your spending?
Use a different form of spending for the next month. For example, if you always use credit, try cash. If you always use cash, try credit. See what happens. This could help you save you more money.
How do you spend your money?