You begin every month with the best intentions. You make a budget and plan to stick to it. So how come you find yourself coming up short by the time the next payday rolls around?
1. Impulse purchases. Have you ever gone into a store to pick up one small item and left with a bag stuffed full of merchandise you didn’t intend to buy?
What you can do. Impulse purchases are more likely when you’re rushed, tired or under stress. Try to avoid online or in-person shopping under these circumstances, and always bring a list to the grocery store.
2. Missed savings opportunities. Don’t you hate finding out that the very thing you just bought was available from another retailer at a lower price?
What you can do. Think twice about squeezing in some quick online shopping during your lunch hour. Plan purchases well ahead of time and give yourself the opportunity to comparison shop for the best deal. Purchase from stores that have a price protection policy in case your item goes on sale later.
3. Buying on credit. It can be easier to overspend when you use plastic, especially when it doesn’t feel like “real money.” And you can quickly lose track of growing card balances that make even the items you buy on sale a lousy deal after factoring in hefty interest charges.
What you can do. Pay cash whenever you can — and bring only enough money for items you plan to buy. Be careful about reflexively using credit cards for a cashback or travel benefit. You may find it’s not worth it in the long run. You can also use your debit card, which is more likely to make you stay within your available balance. If you do use credit cards, pay off balances in full each month.
4. Unexpected expenses. Sometimes we spend too much because we don’t anticipate purchases that we probably could have — like a car repair for a vehicle with 150,000 miles.
What you can do. This is why it’s so important to establish an emergency fund to cover at minimum three-to-six months of regular expenses (more is better if you can) or an occasional big repair bill. And beef up your savings target if your car or house or computer is older.
5. Falling for a sales pitch. It’s the cliché of the pushy used car salesman that comes to mind, but coming across slick or aggressive salespeople is sadly a common experience. Sometimes, they can persuade us to act against our better judgment.
What you can do. Know your limits in advance. Set a cutoff for purchases and be willing to walk away. You can always fake an emergency phone call or restroom trip to buy yourself time before you pull the trigger on a purchase. Remember that you can always come back later to buy.
6. Impulsive holiday or vacation spending. It’s easy to get swept up in the moment during holidays or your annual summer trip to the theme park, especially when you want to make special memories for loved ones.
What you can do. Include holiday and vacation spending in your household budget. Put a little bit aside each month before the event. You can also open a separate special occasion fund.
Simply having a budget isn’t enough — you have to stick to it to get the benefits. Talk to a WellCents financial professional to help you crunch your numbers and figure out a sensible strategy to stay the course.