The fundamental rule at the heart of almost all personal finance advice is simple: resist the temptation to spend excessively. Without this self-control, it becomes challenging, if not impossible, to achieve any long-term financial objectives.
It doesn’t mean you can’t spend at all. It means learning the power of saying “No”. This isn’t an easy feat since it goes against our natural instincts. As mammals, we’re inclined to prioritize immediate benefits over possible future rewards. Successfully managing your finances entails overcoming these impulses to spend money in the short term. Falling into the debt trap is a common issue many face due to this very reason.
So, if you’re concerned about jeopardizing your financial health with an unnecessary purchase or wish to know how to steer clear of debt, here are some tips:
1. Understand retailer strategies
When you step into a department store like Macy’s, or even a grocery store, you’re unknowingly exposed to numerous subtle prompts designed over many years to entice you to part with your money. By becoming savvy to these tricks, you’ll be better prepared to resist spending temptations.
We’ve all seen the classic strategy of limited-time discounts and sales to create a sense of urgency. The moment you see a “20% Off This Week” sign, the goal is to compel you to buy now, regardless of whether you need the item or not.
Many stores also strategically place “impulse purchases” near the cash register. Items like gossip magazines and candy bars, which you might overlook with more time to think, are positioned to tempt you into a last-minute purchase as you check out.
2. Self-dialogue
To efficiently resist these aggressive marketing prompts, you need to reinforce yourself with a positive money-saving message. Identify what drives you towards financial freedom and wealth. Use these objectives to shape your positive frugal message.
If you struggle with the urge to shop or spend money frequently, write down your message on various pieces of paper, specify why you’re resisting spending temptation, and position these reminders where you’ll regularly see them. This helps keep your financial goals and motivations close at hand.
3. Limit your spending capacity
Another way to curb impulsive spending is by restricting your means of payment. If you overuse credit cards, freeze your card in a block of ice. The next time the urge to shop hits you, you’ll need to wait for the ice to melt, offering ample time to reconsider. Alternatively, entrust your card to a reliable family member or friend and establish that they only return it under emergency circumstances.
If you’re prepared to cast aside your credit card completely, consider cash or a debit card as a safe alternative. These options limit your spending power, reducing the likelihood of temptation.
4. Prioritize needs and explore cost-free substitutes
Lastly, begin concentrating on distinguishing your “needs” and “wants”. Especially during festive seasons, when our shopping impulses run high, it’s important to substitute your spending urges with more frugal pleasures.
If you frequently dine out, for instance, try discovering some enjoyable, easy meals to prepare at home. Adopting such frugal habits sets you on the path towards financial stability and wealth.
