“Retail therapy” –it’s a wonderful thing, isn’t it? That is until you get your Visa bill or bank statement and realize that regular therapy might be a whole lot cheaper! Does this mean you have to give up your fun shopping trips for clothes, shoes, electronics, etc. to have financial peace? No! You just need the proper tools to set reasonable limits on your fun, so your “fun” doesn’t ruin your finances.
First, you must do a budget before the month begins and decide on purpose how much you have to spend in each category. This one step is half the battle! Before you go shopping, be sure you check the budget to see what your monthly limit is and how much you have left to spend. I use my bank’s budgeting software found on their website. It pulls in all of my posted transactions in real time, so I can quickly see how much I’ve paid out in each budget category and what’s left to spend. I can also check this on my iPhone, so there are no excuses!
What if you KNOW how much you have to spend on non-essentials, but are constantly overspending anyways? Cash is king when it comes to keeping yourself in check! That’s because spending cash actually registers as pain in your brain. This means that you’ll think twice about laying down your cold, hard cash for a purchase. If you put a certain amount of cash in your wallet for discretionary spending, it’s very easy to see how much you have left for the month. Consider investing in Dave Ramsey’s cash envelope system, which makes budgeting and tracking your cash purchases both easy and stylish!
What if you’re nervous about carrying around a lot of cash? Is there no hope for you? If carrying cash makes you uncomfortable, then consider getting a pre-paid Visa card. Each month or payday, you can set up a transfer of a certain amount for your discretionary spending to be added to your card. These pre-paid cards don’t let you spend money you don’t have, so it’s a great way to set self-imposed limits on your fun. Yes, you will pay a small fee which varies based on the card you select. However, if the pre-paid Visa keeps you from blowing your budget – or bouncing checks – you’re still coming out way ahead.
If you’re considering a larger purchase of $200-$300 or more, think about instituting a 24 to 48 hour waiting period. In most cases, the item will still be available for purchase in a day or two. This will give you time to come down off that “buyer’s high” and rationally decide if you really need or want the item. I think you’ll be surprised by how many times you decide to pass on it once the excitement wears off.
Do you feel like you have control over your spending?