When it comes to your finances, do you take a head-on or head-in-the-sand approach? If you identify with the latter, then the good news is you're not alone. The bad news? You're not alone. New data suggests that when it comes to managing money, women are not as independent as you'd expect. In fact, 91% of women in couples are not participating in financial decisions. But we want to change that statistic. To help you become a master of your own finances, we're debuting a new series called The Paper Files, where we uncover tricks and tips that will help you manage your money and your future. Ready to tackle it head-on?
Every time we chat to a financial planner about how to manage our money better, we hear iterations of the same simple advice: Spend less and save more. While we know that's the adult thing to do, trying to curb those impulse purchases isn't so straightforward in the real world. It's easy to say you should stop splurging on expensive cocktails but harder when you're at the bar catching up with friends. So what does it actually take to turn good intentions into more digits on your account balance?
We tapped Ash Exantus, director of financial education and a financial empowerment coach at BankMobile, a next generation digital banking app, to find out how to navigate shopping temptation and multiply your savings in weeks, not years. Consider this your guide to Jedi mind tricking yourself into spending less and saving more.
Pinpoint Your Triggers
Like learning to eat healthier, the first step to forming better habits is to identify your triggers—the things that tempt you to spend money. Whether it's that daily Anthropologie newsletter that makes you want to refurnish your entire apartment or the 3 p.m. sugar craving that makes you duck out to buy a snack—it doesn't matter. Whatever it is, it's important to identify that trigger so you can address it.
"The best way to identify these triggers in order to save money is to ask yourself questions before you spend," says Exantus. Follow this checklist before you proceed to the checkout:
- Do I really need it?
- If I get it, how long will I use it?
- How long will I enjoy it?
- Are there other ways to get it? (Borrow, buy used, cheaper, split with a friend?)
- What if I don't get it? Will my life still be ok?
Let's get real: If you struggling with impulse shopping, it may not be realistic to try and instantly scrap these triggers from your routine—and that's ok. "Cutting out these triggers may not be realistic immediately, so another good idea is to add impulse buying to your budget," he recommends. That way, "when you do succumb to these triggers, you are not jeopardizing your real savings." Once you see how much your real shopping habits impact your budget, you'll likely be encouraged to change your ways.
Now that you've identified the triggers that tempt you to spend big, it's time to turn good intentions into actions. If, for example, you know that you spend a lot of money at bars and restaurants, identify realistic alternatives and make plans to do them. Don't worry, we're not saying that you should go on a monthlong alcohol ban. Instead, schedule some time in your diary to have friends over for a BYOB cheese and wine night. If you're the first to initiate plans, you won't have to awkwardly decline a costly dinner when the reservation has already been made.
The most crucial step is adding these events to your calendar; treat it like you would a meeting at work. If you know that you waste money buying lunch each day, block out an hour on Sunday afternoon to batch cook your meals ahead of time.
Open an Online-Only Account
Even financial experts struggle with overspending. To prevent dipping into savings without thought, Exantus swears by this hack. "I personally curb spending by making money inconvenient and automating [the process] as much as possible," he explains. "I have three accounts: A savings account, a bill account, and a spending account. My savings account is hidden from view online and it is not connected to any debit card so it removes the temptation of me touching my money."
After you've opened a online-only savings account without card access, automate your payments. "I have a percentage of my paycheck go into this account automatically," he says. Once utilities and phone bills are paid from your bill account, move the rest of the money into a third account. "Whatever is left over goes into my spending account which I use freely because I know that my savings and bills are already covered. This way I can spend like I'm being irresponsible all the while taking care of all of my financial responsibilities."
Start a Money Log
This step is crucial: If you don't know what you're spending your money on, it's impossible to know how to save. Yes, you might be aware of big, obvious financial drains, like a costly monthly membership or abusing your Seamless account, but every small purchase counts, too.
Once you've downloaded a financial tracking app, turn on the notifications so you're automatically told when a big charge comes through and resolve to scroll through your statement once a week. "Check your account every Monday morning so that you can see what you spent during the weekend and know how to proceed for the upcoming week," says Exantus.
Delete Your Credit Card Details
This hack is simple but oh so effective. One of the reasons that online shopping is so tempting is because it requires very little effort to make a purchase. If you see an item you like, it can be yours with a few thoughtless clicks. In fact, studies show that when people use cards instead of cash, they're likely to spend more money.
After you've wiped your credit card information from your computer, head to an ATM and withdraw cash in accordance to your budget. Research suggests that using cash for everyday purchases can help you save money because handing over physical notes helps you internalise the act. In other words, it's much harder to hand over $100 in cash to buy that bikini top you've been eyeing than it is to click buy at the checkout and forget it ever happened.
If you don't like the idea of carrying around a wad of notes, Exantus has a digital solution. "I would suggest using technology to stop from overcharging. For example, set limits on your debit and credit cards by calling your bank in advance of shopping or literally freezing your credit cards so that you only use during emergencies," he says. "The more inconvenient you can make access to money the better."
Have you tried a financial tracking app? Tell us which one you swear by.