A conversation came up in a group that I belonged to recently and a few people spoke out jokingly that they are unable to resist the temptation to spend as long as they have the money. I recognized the joke in that but at the same time, I know that a lot of people may be battling with financial indiscipline in the area of spending. As with any other phenomenon, I turned to my own financial life to pick a couple of lessons on how I have managed to stay disciplined.
From my youthful age, I’ve always been prudent with money. While that is good for me as an individual, it’s sort of not so great for me as an educator that I am now. Meaning, I’ve not had to fight and battle some tendencies that my readers may have. Notwithstanding, I’ve listened to a lot of your stories and advised a lot of you. So to some extent, I share your struggles.
So if you are the type that always finds it hard to stay on budget, the 5 guides below would be your saving grace. They’ve worked for me and others and I know it will work for you as well.
Different accounts for different purposes
This principle has been amazingly helpful to me. Once I get paid, the first thing that I do is to transfer the money to different banks for different purposes. The first goes to a bank that I use to operate my monthly expenses, the other goes to my savings and I leave just a paltry in my salary account for a rainy day. Usually, a rainy day comes when I’ve almost exhausted my monthly expenses and need something as a cushion before the next pay comes in.
The number one benefit of this strategy is that I quickly lose the illusion of having a lot of money in my account. An illusion that triggers the “spend spend” hormone in you and I. In just a wink of an eye, I have lost the enthusiasm of a payday and back to the mood of “you’ve got to be prudent with what’s left”. I found that if I don’t do this, I tend to spend more than necessary.
And you know what, there’s one month in the year that I allow myself to let go of this rule. And it is that month that I spend the most in the 12 months of the year. That’s December. I tend to spend more in that month but it’s by design.
I save more than I should then give a mid-month allowance
As I mentioned above, I tend to leave some amount of money in my salary account that I often need to fall back on as the month runs to a close.
That happens because I usually save more than I should. I don’t give myself a generous budget. It’s another strategy that I’ve employed over the years. It has helped me to be financially disciplined enough for my expense not to rise in tandem with my income.
Of course, I don’t want to suffer myself on the back of saving for the future, lol. So if I need money mid-month I tend to pay myself more.
Huge projects expense come from a different account
Whenever I want to make huge purchases, the money doesn’t come from my expense account. Remember that the account is always too lean to be able to accommodate such expenses. So what I do is to withdraw the money from another account where I send all my money before they are either invested or used for huge purchases as the case may be.
The benefit of this is also to foster financial prudence. I know that every purchase of this nature is reducing my investable capital. And being someone that likes to invest money, it usually takes a lot before I can agree to make such purchases. When I say “take a lot”, I mean I take my time to consider it well and be rest assured that indeed the item/material is deserving.
I delay almost every purchases
…and whenever I make the purchases, I always go for the quality.
This point is related to the one above. I don’t make huge purchases the moment I perceive I need them. The nature of huge purchases is usually that we can delay them for as long as we want and it won’t significantly affect our survival. So I tend to delay it more.
Something my Mama taught me is that if I am going to buy something, I could just as well buy the quality ones that will last longer. What’s the point of buying something that you need and you are buying a lower quality and that will soon need a replacement again? This is especially so if you can afford the quality one.
The process of delaying of course allows me to do research, weigh my options, stops me from being in haste and helps me to make an optimal decision. You should try it as well. Delay that purchase.
Don’t be an impulsive spender
Still related to the point above but I believe it needs a class of its own.
Fundamentally, I am freaked with materials. But I’ve never been impulsive enough to buy them on spot. Controlling my impulse is the key. Except you do so, of course, you won’t have discipline you so much needed.