Hands down one of the most frustrating feelings — and biggest first-world problems — is the moment when you realize your favorite jeans are fitting a little tighter than they used to. Of course, gaining a few pounds isn’t something to cry over, and it certainly doesn’t bother everyone! But, if you’re anything like us, you probably feel an instant motivation to make some changes and reset your health and fitness routine. Whether it’s making an effort to cook all of your meals at home or to suggest a yoga class instead of happy hour when meeting up with friends, everyone has tried and true tactics they use to dial their lifestyle back in and make healthier choices. Whatever method we choose, we know we won’t snap back overnight.
The same approach goes for money. Getting on track with your finances is a series of small, consistent choices made over time. You can’t get a six-pack overnight or with a crash diet, and you certainly can’t achieve financial freedom in just one pay period. Whenever we feel like our spending is getting away from us, we have a few tried and true methods to reset. Not all of these methods will work for everyone, but depending on your lifestyle and personality, there is at least one strategy for you.
1. All-Cash Diet
In today’s world, it’s super rare to ever see money exchange hands, even though we make dozens of different transactions every week. Whether it’s your paycheck hitting through direct deposit, your morning coffee ordered through your Starbucks app or your ride to and from work hailed through Uber, most of our financial choices are made with the click of a button or the swipe of a card. This can make it really challenging to keep track of where our money is going or to have an emotional connection to the cash coming and going.
If you’ve noticed your spending getting a little out of control or your credit card balance creeping up higher than you’re comfortable with, it’s time to reset and an all-cash diet can be a great way to do so. Aside from monthly expenses, investments and savings — that we would recommend having on autopay — all other purchases should be made using cash. It may seem a little crazy, but, when you get paid, take out all excess cash that you would normally reserve for the “fun stuff” and make this last until your next paycheck.
When money is physically leaving your hands, it makes you think twice about the value of all of your purchases, especially if you need to break a big bill to do so. That $3 scone you’re craving during an afternoon slump at work may not seem worth it if you have to break a $100 bill to buy it. Even though you may miss out on your credit card points or air miles for a month, your credit score will thank you later for taking a month off to reset + think twice about every purchase.
2. Cash Envelope Method
Popularized by Dave Ramsey, this spending reset strategy has been around forever and is continuing to grow in popularity with many companies even selling decorative or personalized envelopes to get the job done. (A little ironic to actually pay money for a system that’s supposed to help you save, but that’s another story…!) This method takes the “All Cash Diet” mentioned above one step further and is a great solution for many different spending pitfalls. Whether it’s not knowing where your money is going or consistently overspending on a category that you don’t want to, the Envelope Method is a great way to take control. With this method, you not only take out cash to cover all of your fun for the month (like the All Cash Diet method above), but you also, allocate exactly where you want your money to go, in advance, by separating it in envelopes. Let’s say your wardrobe really needs an update, but you feel you can never afford to go shopping because your weekend brunch expenses have been racking up.
Using the Envelope Method, you would choose an amount that you feel comfortable spending each month, on each category, and keep that amount, in cash, in its respective envelope. Let’s say you allocate $50 for Restaurants and $100 for Shopping. Once your Restaurant envelope is empty, you can’t continue to go out to eat without borrowing from another envelope and potentially sacrificing your goal of new clothes. Knowing that you have to steal from another goal or priority is a great way to really question the value of going over your budget and really helps to keep your spending intentional – being proactive versus reactive.
3. Keep a Money Diary
Most people are pretty good about keeping their big purchases and expenses in check. The vast majority of people have set limits on how much rent they can afford to pay or know that booking a first class seat on Emirates is out of their budget. It’s really the small purchases that add up and get us all into trouble. Throughout the course of the day, it could be so easy to spend $50 or more and not even realize it. Let’s say you missed your bus and took an Uber to work, grabbed a coffee and breakfast sandwich at Starbucks and late canceled a workout class – all highly probable occurrences if you’re anything like us. Expenses like these can quickly add up, but don’t bring you the same happiness as spending that same $50 on a new pair of shoes or a concert ticket.
When you feel like your small expenses are adding up and you’re making impulse spending decisions, a money diary is a great way to reset. In this strategy, you can simply carry a cute notebook in your bag throughout the day, or use the Notes app on your phone, and jot down every purchase you make. Not only does this provide a great way to look back at the end of the day or week and see where you need to improve, but it could also prevent any bad purchases before they happen. If you have to write down your 4th glass of wine on paper, you may be less inclined to make the purchase at all. This is a strategy that you can easily continue even after your spending is on track. It’s always a good idea to know where your money is going.
4. No-Spend Days
We all have certain months that seem to be a little busier or more expensive than others. The holidays are an obvious one and, thus, a little easier to plan for, but sometimes things creep up out of our control. Let’s say three of your friends are having July weddings and you’ll have to shell out for gifts three weekends in a row. Other than simply not attending weddings or not purchasing gifts, there isn’t a lot that you can do to avoid these expenses, so you’ll need to offset them in some way.
In a particularly expensive month, it’s a great idea to set a goal for “No Spend Days.” As mentioned in the last example, many of us can easily spend $25-50 in one day without even realizing or intending to. Just setting a goal of 5-10 No Spend Days in a month can easily offset the larger expenses coming your way and ensure that you can enjoy your friends’ weddings without going into credit card debt to attend.
There are so many ways to get back on track when your spending gets out of control. These are just a few of our favorites and the tried and true methods that work for us. What methods or tips do you have to reset your spending? We’d love to hear from you!
Lauren + Kelda are millennial sisters raised + living in Seattle. Together, they have built a personal finance + travel blog, specifically catered to millennials. They cover everything from what goes into a credit score, how to get started investing, and how to afford travel while tackling your savings goals. Their goal is to change people’s feelings towards money from fear + anxiety to empowerment + freedom. People should be excited about how financial literacy can help them to live the life of their dreams!
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