Somehow at the end of each month, no matter how much you plan, you can’t seem to stick to your budget. In some cases, you were way off, so what happened? The typical main culprit is not being able to accurately track your spending, especially if you have a credit card. In the moment it feels like you are just buying what you need, but if you can look back at exactly what you bought you might be surprised. Many people fall victim to the impulse buy, so here a few tips to help you track your spending and reduce impulse purchases.
The most accurate and complete way to track what you are spending is to collect a receipt for every purchase you make and enter the transactions into an excel sheet or write it in a notebook. This would allow you to see what exactly you are buying and when. Even though this method is the most accurate and informative, it can be extremely time consuming. It is only recommended for those who are still struggling after trying a broader option. Tip: it is best to enter your transaction in set intervals. For example, enter your transactions after each day, or every few days. If you let it build up for a month and then sit down to write them down, you might not remember exactly what you bought, and it will create an extremely overwhelming and time-consuming project.
A decent second best is to enter the totals you spend at each location from your credit card statement and any receipts you have when you pay cash. Tip: Some people pay with cash to hide it from themselves on the card statement. Make sure to be diligent with keeping receipts or always pay with your card. This will keep all transactions visible, and you won’t be able to spend money under your radar. This can be done at the end of each month when you are comparing how well you followed your budget. The best way to enter these transactions is either in a notebook, excel file, or you have the option of having an app do it for you.
There are many apps that you can link your credit card and bank accounts to that will compile all this information for you. This may be a lot easier than doing it yourself, however, you will want to make sure you do the due diligence to protect your information from being hacked or using a fake app. When picking an app to track your spending begin by asking your friends and family what they are using. Do not just ask what they use but check to see how long they have been using it and ask if they could give you a demo. Picking a safe app is important but you also want it to be easy to use for you.
Popular free apps include Mint®, PocketGuard©, and Honeydue©.* Mint links to your financial accounts and tracks your spending and income. It can also alert you to suspicious activity and can keep track of bills and credit monitoring. PocketGuard can also link to your financial accounts. It will automatically deduct reoccurring bills, savings goal contributions and pre-budgeted money from your income to show what is left over for everyday spending. Honeydue is an app that allows you to see the financial information for both you and your partner. This allows you to set a joint budget, reminds you of upcoming bills, and you can even set joint category limits.
Simply by creating a way to track what you are spending helps reduce the number of impulse purchases you make. This is because when you know what your budget looks like in real time and must track each item, you question if and why you need each item.
The best way to reduce impulse purchases is to do the follow:
- Stop and ask yourself:
- Do I need this item?
- Can I afford this item?
- What will I do with this item?
- Do I have something similar at home?
Doing this can help significantly decrease the number of impulse purchases you make. You should not be afraid to treat yourself every once in a while, but this will help you treat yourself and stay in budget.
Good luck on your saving journey! Reach out to a financial profession to help you manage those savings and get the services that will best fit your needs.
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*Alltrust Credit Union in no way sponsors, endorses, or administers with any of the apps listed. Usage of any app is the responsibility of the consumer. Data rates may apply. Check with your mobile phone carrier for details.