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After Alison Bagery got married and conceived her first child soon after, she, along with her husband, found that the couple was over $111,000 in debt, mostly in student loans and auto loans. rice field.
The Houston-based couple, both teachers, owed more than $1,400 a month, not including their mortgage. They sat down to have their first conversation about money.
After four and a half years, they managed to pay it off with a teacher’s salary and add another child to their family.
“I couldn’t afford to stay at home, and in the process, budgeting became very liberal for me,” the former elementary school teacher Baggary told MarketWatch. Become a financial influencer andmoney maid easy,]Released on April 4th.
“I still struggle with impulse buying. I’m not going to lie,” she added. However, she has since built various coping mechanisms.
She is one of many Americans who have fallen into a similar dire situation. In forgotten times, budgeters used to divide the cash in the envelope as “crazy money” and spend it on whatever their heart desires.
Today, that practice is gone as digital wallets and currencies converge all kinds of spending, from business payments to childcare to restaurant bills.
With rising costs of living and rising interest rates straining many family budgets, what can people do to keep their spending in check? MarketWatch asked three personal finance experts.
They shared strategies that have helped them and their clients, from compulsively addressing bad habits to putting them in the head rather than the heart.
Are there red lines or boundaries that should not be crossed?
According to Bagery, the biggest strategy that made a big difference in her spending was adding boundaries, especially adding friction. In other words, it makes it artificially difficult to click and buy an item.
Many websites and businesses are trying to optimize online shopping and make it as smooth as possible. But the added layers of friction could slow the pace of spending, Bagery said.
Spending can be tempting, especially during festive times such as holidays. “I’m dying to spend my money,” Baggary said during this time. By recognizing her that her craving and adding the artificial hurdle of forcing herself to check in and get her permission from her partner, she can get out of that spiral.
“I tell my partner not to spend money on this credit card unless we agree,” she said. “For me, that accountability and having very clear boundaries removes the temptation.”
Other tactics include placing items in an online shopping cart and waiting a while before checking out. Or save the item on Amazon for later and wait a week before checking out.
Buying one-off items is easy and may seem like a small purchase, but adding them all in one basket can show the full impact of your spending.
Does spending money really make you happy?
Our society is set up for relatively easy access to credit, from student loans to credit cards. Not to mention the fact that “spending money feels good,” says Lindsay Brian Podvin, his therapist at Ann Arbor, Michigan-based Financial. Her work includes merging mental health and money.
She explained that spending money releases feel-good chemicals in your brain. “We are influenced by chemicals that we all need and crave: endorphins, serotonin, oxytocin, as well as dopamine. Shopping fulfills these types of chemical needs. It’s a very good and predictable method for…explained.
But look closely at your spending. Are you spending on meaningless things that give you short-term pleasure, or can you focus on things that will keep you happy longer?
Tom Shepard, who runs his own financial planning firm in Maine, said some clients feel guilty after spending big bucks.
“It’s like an experience of highs and lows,” said Shepard.Money is not everything, money is everything.” will be released on April 24.
He recalled a female client in Manhattan who worked in retail and spent a lot of money on shoes. It turns out that it’s not too much.
“So we allowed her to spend more money on things she really wanted to spend money on,” Sheppard said. I signed up and hired a personal trainer. He doesn’t spend all his money on shoes.
“Six months later, she stopped spending money on shoes because she started spending her money on things that bring a better feeling to her life instead of this shopping regimen routine,” Shepard said.
Bagheri had a similar experience, she says, after moving to a new house a few years ago and wasting away.
“In other words, Amazon
Every other day a box would arrive at my house,” she recalls. She put a mental brake on her own behavior and made her home more comfortable and welcoming as her eldest son had to move schools and was having trouble adjusting. I realized that I was spending money to make it.
“I was trying to use the money to build a beautiful house so he could feel at home,” she said.
But at the same time, don’t try to cut back on spending with the same zeal that some people start on a massive diet. According to Bryan-Podvin, being intentional and gradual makes it sustainable.
Some may say they never eat out, but when a friend says they want to celebrate something together, that “diet” dam breaks and they start thinking money sucks. said Bryan-Podvin.
“Give yourself the space to go out to dinner once or twice a week. It’s much more sustainable,” she added.
Do you know your hidden bad habits?
Examine your financial behavior and see if you spot any bad habits. Rope your significant other or friend to help you see your blind spots.
While some people have perfect credit scores and large amounts of savings and investments, others have strange money habits.
please think about it. One of Shepard’s clients. When this man was in college, his first credit card had a $500 limit on him. But unlike people with healthy credit habits, he used it all up and then paid it off in full.
His credit limit kept going up and he continued the same habit of spending to the limit. Shepard met him when he was spending his $50,000.
“That’s the pattern you’ve created in your life right now, this reward system that makes you experience the value of money and ties it to paying off your credit card debt,” Shepard recalled telling him.
“My next concern is that the next credit debacle will be $500,000,” he added. He worked with the man to encourage him to invest his money instead of engaging in a “beverage approach.”
What are you paying for?
Focus on cutting your biggest expenses first, says Bryan-Podvin. If you can negotiate a lower rent, encourage your landlord to do so. Or try to lower your car loan interest rates.
If negotiating with your landlord isn’t on your agenda, go back and investigate the spill. Bryan-Podvin said, “We have to be ruthless about cutting other areas.
For anyone else who has worked out the costs, try to understand your goals. Is paying off your 2% mortgage interest more important than saving for retirement?
Shepard said one of his clients hadn’t contributed to his retirement account because he was so focused on working two jobs to pay off his mortgage at a 2.5% interest rate.
Another psychological tip: Change the background of your phone and computer to reflect your goals, says Bryan-Podvin.
For example, if you plan to spend a lot on an expensive handbag, use that photo as your iPhone background for inspiration. The fact that you keep looking at your phone every time you look at it is a great reminder of your financial goals.
does that sound weird? That may be so, but let’s not forget that he checks his phone an average of 352 times a day, according to cell phone insurers’ reports. Asurion said in 2022.
Are you a victim of false altruism?
be careful when that too Take care, Brian-Podvin said.
Some may be willing to spend the money because the brand they are looking to buy demonstrates sustainability goals. For example, donating shoes or sunglasses to the poor. Please check if you really need the item.
Sustainability items may come with a hefty price tag. Younger generations are particularly vulnerable to this problem, said Bryan-Podvin.
“They are much more likely to buy bottled water, which also provides bottled water to those in need. can also be connected,” she explained.
Frankly, “You consume a lot of merchandise thinking you’re doing good in the world,” Bryan-Podvin added. effective and may be a healthier way to manage cash flow.
And for some young consumers, watching consumer videos on social media can also encourage bad spending habits, she said. “They tend to be pretty popular, and now you can shop with the tap of a button.”
Will there be a “fun money” fund?
About envelopes full of cash: they are useful when used for a specific purpose. In fact, Bryan-Podvin has a bank account that acts as a fund that can be used for pleasures such as facials and treatments.
Similarly, Ms. Bagery said she has multiple “sinking funds” for things like travel and children’s clothing. Increase it when you anticipate a large expense.
She also has wishlists for special occasions for her and her children, much like the Registry. I feel like I’m buying exactly what I want, which is also great.
Bottom line: Spending less can bring out your ruthless side, but thinking strategically about your spending and rewarding yourself can also be fun.