Author: Rebekah L. Nau, CFP®
A lot of money decisions are made purely from habit, ones that we’re not always aware we have. To help us make better financial decisions, here are some of my favorite good spending habits:
1. Manage stress: Retail therapy is a real phenomenon and it affects us all. Advertisers depend on it! They feed on our emotions. And often-times, it’s when we’re feeling stressed or down that we justify spending money on things we may regret purchasing once the blues have worn off. “If I just had that ice cream cone, that new outfit, that new Apple watch, then I wouldn’t feel so bad,” says my persuasive inner monologue. If we learn to manage our own stress, it will also help the stress on our wallets.
2. Sock unexpected money away in savings: You know that joyful feeling you get when you find a crisp $20 bill you had completely forgotten about in the jeans they wore last week? And then immediately think about how you’re going to spend it? The same thing happens with cash gifts or tax returns – money that we weren’t expecting ends up being spent. But if you commit to saving any money that came to you unexpectedly, your future self will thank you.
3. Spend real cash: Studies have shown that consumers are more averse to spending when they are paying with cash than when they are swiping a credit card. You don’t have to go to a full envelope system of spending (i.e. using cash to pay for all of the things), but in some cases, it may make sense to hit the ATM. For example, if you’re going to an amusement park or a trip to the mall and you only want to spend a fixed amount of money – take out that much in cash and only spend what you have.
No one has perfect spending habits, but even the tiniest of steps towards a better relationship with money can have a big impact.
DISCLAIMER: Past performance does not predict future results. This report is based on data obtained from sources we believe to be reliable. Hefren-Tillotson does not, nor any other party, guarantee the accuracy or completeness of this report or make any warranties regarding results obtained from its usage. All opinions and estimates included in this report constitute the firms judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation to buy or sell the securities herein mentioned.