It’s been said that a penny saved is a penny earned, but that’s actually an understatement.
You have to pay income taxes on your earnings, but you get to keep all of your savings. Since a penny saved is actually worth more to you than a penny earned, it makes sense to take every possible step to save as much money as possible.
Here are six techniques that you can use to control your spending and save more of your money:
1. Create a diary and work towards a goal.
When a doctor or nutritionist needs to know what a patient is eating, they ask them to create a diary of the foods and drinks that they consume every day. Likewise, you’ll never really know where your money is going until you create a list of all of your spending for one month.
This will accomplish two things. First, you be more conscious of your spending habits during the purchase process. But also, you’ll be able to add up all of your monthly spending and find out how much is going to different kinds of purchases. This is the information that you’ll need to decide where to cut back to reach your saving goals.
2. Increase your spending friction.
Credit cards and other forms of electronic payment are said to lubricate transactions, making it easier to spend money. This is great if you are a merchant, but as a consumer, you’ll actually need to do the opposite to control your spending.
Thankfully, there are several ways to make it harder to spend money, which will help you control your impulses. For example, you can leave your payment cards at home when you aren’t planning on making a purchase, or you can just start using cash only, and carrying a limited amount.
3. Go on a spending fast.
One way to control your spending in the short term is to cease all discretionary purchases for a limited time. For example, you might decide stop eating out, stop making entertainment purchases, and stop buying new clothing until the end of the month. You can even decide to go through your pantry before going to the grocery store.
4. Focus on reducing recurring expenses.
While it’s helpful to look for any way to save money, the largest long-term savings will come from reducing recurring monthly expenses.
For example, you can cancel your pricey cable or satellite television service and use a digital antenna and possibly a streaming subscription. Buying a smart thermostat and switching to more efficient light bulbs can help you save on heating and electricity bills. And of course, you’ll want to minimize your interest payments by eliminating credit card debt, paying off a car loan, or refinancing your mortgage.
5. Fight impulse purchases.
One of the ways that retailers maximize profit is by encouraging impulse buying. To do this, they place displays at the entrances, and present additional items by the cash register that they know that people will buy on impulse.
By recognizing these techniques and spotting them in stores, you can guard against the desire to just toss another item in your cart.