Updated: Nov 16, 2018
Why should you control your spending?
Have you ever gone to the store and put a handful of things in your cart then you go to the cash register to pay and as you swipe your card or insert your chip it flashes 'card declined'? You then get this gut feeling that you may have gone over draft. You then look at your bank account and it's negative $65. Great, now you are broke, embarrassed and you wasted a shopping trip.
Consider the benefits of controlling your spending. If you control your spending you will have money when you need it such as traveling or an emergency.
You will have less or zero debt. The Bible says: “The borrower is a slave to the lender.” (Proverbs 22:7)
You show show yourself to be a mature adult. People who control their spending are better prepared for 'adulting'.
Having controlled spending looks good when you are buying a house. Trust me- the bank looks at all your expenses. Including the overly expensive handbag that could have been a down payment for a house - Seriously! What were you thinking?
Tracking your expenses can help you stop feeling like you have little to show for your hard work.
Knowing your income will help you create a budget that allows you to pay for living expenses, such as food and rent, as well as set aside money for entertainment, special purchases, or emergencies.
Needs vs. Wants- Do not confuse the two.
There’s nothing wrong with buying things that you want. It’s a matter of priorities. The Bible says: “Make sure of the more important things.” —Philippians 1:10 Needs are necessary expenses. Needs would be defined as goods or services that are required. This would include the needs for the following Basics.
For example, one needs clothes, but one may not need designer clothes.
Wants are optional expenses or goods or services that are not necessary but that we desire or wish for. Just because clothing is in the needs category- doesn't mean you should get those pretty luxurious shoes from Tiek or Christian Louboutin. Wants includes things such as subscriptions such as Netflix, beauty products, cable, holidays and fancy food. I would recommend making a list of your needs and wants and to tell if something is a need or want, just ask yourself the following three questions.
Can I live without this?
Can I work without this?
Would other people classify this as a want?
If you answer no to any of them, it's a need. If you answered yes to all of them, it's a want. Strike a balance- if you identify the things you choose to spend your money on, then you can choose not to spend it if you need to allocate funds elsewhere. Sometimes the line between needs and wants can be blurry. Make sure to prioritize the "more important things."
Spend Vs. Save- Do not overspend
The Bible says that “the one who loves having a good time will come to poverty.” (Proverbs 21:17) How can your attitude toward recreation affect your spending habits?
Even if I find an item on sale for a certain percent off, I know I can save 100 percent if I don’t buy it in the first place! We should all know there is nothing wrong about looking for a good deal and saving a few dollars here and there. I call that a smart shopper. After all, this means that you will have more money left over for the things you need and want.
Luckily for me, I grew up with a very strong and independent family. My mother had instilled in me from when I was very young that I must earn my own money when I grow up and be savvy with it. She taught me to never let a man take over your money, especially if you were the one working hard for it. My grandmother taught me to value even a penny although it may seem worthless because she claimed you never know if you might need it. Since then I have kept penny jars quite like the one as seen in the movie Up. My mother has been working since she was a tiny girl, and my grandmother had the heart and grit of a lion. Both taught me to be independent and always supported me by rooting me on. They taught me to appreciate my God given gifts and talents. My father also a hard-working man taught me the power of hard work and discipline. And he later inculcated in me to save, save, save. Growing up it was so inspiring to see how much he had accomplished and done for me- always being able to provide a roof over our head and food in our bellies. I am so grateful to have grown up with inspiring role models like the three of them.
Now Vs. Later- Do not buy on impulse I'm not going to lie, I wasn't always money savvy. I knew from the bottom om my gut I was an impulsive spender, especially when I go to the grocery store hungry and place item after item in my cart until it's overflowing. Another way I knew I was an impulsive spender was when I went into a store and felt I had to buy something for the sake of the store not thinking I was cheap. Silly, right? Try to figure out when are you most likely to buy impulsively? is it
When browsing online.
When out with friends.
When in a negative mood
Right after receiving your allowance or paycheck
When I’m interested in making a purchase, I reason and try to wait at least a couple of weeks to make sure that I still want the item and that I would make good use of it. Sometimes I when I wait I can actually get the item for half off. Or perhaps you should wait for a coupon or sale if the item you are interested in is not on sale.. Make a list some advantages to waiting before making a purchase.
How to control your spending
Know your weaknesses. If you’re constantly running out of cash, first find out where your money is going. For some, online shopping is the culprit. For others, the problem is a slow financial ‘leak’ that drains their wallet by the end of the month!
Those small everyday expenses add up. A gift for a friend here and there, a coffee stop, an extra item on sale at the grocery store and going out to dinner one day -after a month of that, then you wonder where a hundred or two hundred dollars went!
Create a budget. The Bible says: “The plans of the diligent surely lead to success.” (Proverbs 21:5) By creating a budget, you can make sure that your expenses are not greater than your income.
Setting up a Monthly Budge can help you to take control of your money. I bought an inexpensive erase board and filled it in with my monthly income then I put it my fixed and flexible spending. If you spend more than you earn, determine where your money is going and eliminate the things you don't need. I find that most people eat their money by dining out too often. Shrink the list of expenses until you are earning more than you are spending. Here I created a Personal Monthly Budget board that you can fill out.
Follow through. There are a number of ways you can keep track of your money and avoid needless spending. Some people have found the following practical methods to be successful:
- If you have a job that primarily earns tip money- try depositing your money straight into the bank because you know you'll be less tempted to spend it. - When you go to the store, only withdraw a reasonable amount of cash. That way, you can't spend more than you intended to. - The longer you wait before buying something, the more realistically you can consider whether or not you need it. - Always know that you don't have to go to every social event! It's absolutely okay to say no if you do not have the means.
The bottom line: Managing money is a serious responsibility. You never want to squander money especially if you are the head of household. It could mean if you kids or fur baby will be able to eat or not, so it's best to learn these valuable tips now.
Tip: Tell someone about your budget plan, and ask that person to check in with you every so often. Accountability is a good thing!
Use Tools to help YOU
I use Clarity Money and Credit Karma. Because not only do you want good credit, but you also want to see where your money is going. Perhaps you have awful credit because you didn't know about a medical bill that has gone to collections. If you are able to save some money you could potentially pay off your debt.
I love Clarity Money because it can help you take control of your finances. They display your financial picture, help cancel unwanted subscriptions, and deliver insights to you — all in one place that’s 100% Free to use. I could not believe how much I spent on services such as Uber eats or Purple Carrots.
I've used Credit Karma for years - you can see your accounts, your last reported balances and what's affecting your credit scores. I love it for the alerts when there is an important change in my credit score as well as learning what affects my credit scores and what I can do to improve it.
Set up an automatic payroll deduction from your check.
This step is by far the most important in my opinion. Consider a strategy of saving 5%-10% of your income while you're in your 20's. Initially, this will go toward building your contingency fund. Once that's in place, your savings can be used for a down payment on a house, large purchases, emergencies, or vacations. (Eventually, the primary use of your savings will be to invest for retirement.) Then, move up to 10%-20% in your 30's and 40's. How? The steps are easy. Go to your employers payroll and tell them you would like to automatically put 5%-10% from your paycheck into your savings and you won't believe how much you could save. If you have a 401-K with your company you should already be doing this in one way or another. I love this way because you are still storing your own money away- except without the penalty.
Look at it this way- if you earn $1000 bi-weekly there will be a $100 automatically deposited into your savings. So you are left with $900. After a year you should have $2,400!
Honestly I would love to be able to guide you to successfully manage your finances, although a disclaimer is that of course - I don't have a degree in Finance nor do I pretend to have one. However I will say that there are tools that have helped me such as setting up a savings account, or putting aside my certain amount bi-weekly, is one of the best and smartest things you can do. In the next set of blog posts I will show you how. Even if it’s just saving small amount, never underestimate how much it can amount to after a few years. You need savings for buying a property one day or starting a business for instance, and to just generally feel secure financially and to feel you can support yourself no matter what. When it comes to spending, if it’s going to make you broke, don’t buy it! I know it’s tempting but there’s absolutely no point spending all of your money on a luxury item to then not being able to pay your bills or sacrifice by buying cheap food. Don’t get me wrong, I love an occasional luxury item, but I prioritize spending money on healthy food because my health is my priority, I spend money on traveling because I love to experience and discover new places. Eric and I always make the best memories when we travel that will remain in our hearts forever. I also prioritize saving because I want to buy more properties to flip as I know it will be a great investment for the future. Then if I have money on the side and I want to buy myself something special then I do, and I enjoy it with my whole heart because I know I am in a good financial state to do so.
My advice for young girls is to find your dream, and work really hard at achieving it every single day. There is no short cut or substitute for hard work, discipline and grit. But if you find something you love to do, then it won’t feel like work! That’s the beauty of it all! Save your money, feel financially independent and secure, and be smart with your purchases. Have a plan for your future and work for it every day!