How to create better spending habits

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In Britain, we are a nation of spenders. And with half of the UK’s young adults having no savings whatsoever, it might be worth thinking about how to curb those spending habits.

It might be as simple as sorting out your online banking process, or perhaps you have a nasty habit you can kick to save big. Here are a few ideas to change your spending behaviour for the better, which will hopefully lead to big savings.

Automate your spending

If you are yet to take advantage of automating your finances, this should be one of the first things you change.

These days, it’s incredibly easy to set up automatic payments to whatever area you choose — be it utility bills, savings accounts, investments or other creditors. By electronically scheduling all your regular outgoings, you’ll never miss a payment as well as ensuring you commit to putting money aside for yourself.

Link up your accounts to distribute your money on payday. It’ll eliminate all the hassle that comes with paying your bills, plus you won’t be tempted to dodge putting money into your savings account if it’s gone before you see it.

Free yourself from frivolous spending

A quick buy here, a little online shopping there. Day-to-day smaller spends really do add up, even if they don’t seem significant at the time. Take a moment to step back and reflect on your spending habits and identify some to eliminate.

  • Ditch the dailies: the everyday purchases can burn a serious hole in your pocket. A perfect example is the morning coffee. A £3 coffee every day costs you around £750 a year.
  • Take control of your direct debits: have a look at your monthly subscriptions, are you using them all? The Independent reported last year that Brits are spending an average of £40 a month on unused services.
  • Make some healthy changes: if you’re a smoker or drinker, take the opportunity to both save money and benefit your health by cutting back or quitting. A regular smoker spends around £3,000 a year on their habit. The same goes for takeaways; cook healthy meals at home instead and save hundreds.
  • Do you really need it? Whether it’s in the window of a pretty shop or found online, whatever you’re thinking of buying: do you actually have a use for it? It’s way too easy to buy with a single click or a swipe of a card. It’s up to you to really think about what you’re doing beforehand.

Invest the extra

Every now and again you may come across some extra cash. Maybe money from your birthday, a work bonus or a family windfall. The temptation is always to go out and buy something nice, but the smart thing to do is save or invest.

Getting into the practice of putting any extra funds towards the sensible stuff is a great way to set yourself up for the future. This can be anything from using a chunk of money against paying off your student loan to micro-investing your pocket change.

Overhauling your spending habits is a great way of staying on top of your personal finances. Once you’ve made the changes, you’ll be surprised how quickly you see a difference.

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