How to Curb Spending and Increase Savings

Building financial independence and security takes time. In large part, good financial decisions and behaviors are variations on a single theme – spend less and save more. But simply knowing that it’s a good idea to do those things can seem too abstract, unless that knowledge comes with some guidance on how to take action to actually do those things.

Don’t try to change every aspect of your financial behavior all at once. It can be overwhelming to try to completely change too many behaviors all at once, and that can make it difficult for any of those changes to stick.

Here is some straightforward banking advice, along with concrete steps you can take, in order to curb your spending and increase your savings.

• Track Your Current Spending. In order to cut back on your spending, you need to have an understanding of what you’re buying and how much you’re spending. There are many different tools and techniques you can use to track your spending, ranging from a simple pen and notebook to full-featured software applications you can run on your laptop or smartphone. The actual tool doesn’t matter so much as using it effectively and consistently. After a month or two of diligent record-keeping, you should be able to easily identify areas of your spending habits that you can reduce.
• Make Saving Automatic. Once you’ve identified how you’re going to curb your spending and free up more cash for savings, you need to take that final step and actually save that cash. While it’s certainly possible to just “play it by ear” and save whatever you happen to have available at the end of each month, it’s better to make your savings happen automatically. If you don’t use direct deposit for your paycheck, sign up as soon as you can. You can usually specify that your paycheck be divided between multiple accounts, so use this to have a percentage of your income automatically deposited into one of your savings or investment accounts.
• Don’t Tempt Yourself. If you find that you’re often in situations where you’re extremely tempted to spend, it might be worth trying to change your habits in a way that keeps you out of those situations. For example, if you go out with friends several times a week to happy hour, and find that you’re spending too much money each time you go, then consider cutting back on how often you go out. Similarly, if you have a habit of going to the mall just to “window shop” every weekend, but then usually end up buying something, then find another activity to do instead.

The hardest part of curbing your spending and increasing your savings is taking the first step. Start with a new behavior that’s relatively small and easy to change, and build from there, so that you’ll give yourself the best chance of succeeding in the long run.