My dad used to call it “letting money burn a hole in your pocket,” but call it what you will, spending too much is a serious problem for some people. If you regularly spend all the money you have, you'll always be broke.
One effective strategy is to severely limit the amount of cash and credit you have available for spending. (You can also change the way you relate to money; see How to Control Spending.)
Let's begin with the tools that will limit how much money you have at any time. If your employer offers it, sign up for direct deposit, which means your paycheck automatically is deposited in your bank account. If this is not available, deposit your paycheck as soon as you get it.
Use payroll deductions to force savings. Otherwise, you will have trouble accumulating any. Deductions are also a good way to save for retirement. You might want to consider making a regular monthly contributions to an IRA or mutual fund account.
Stick to the List
Because you will be tempted to spend it, don’t carry a lot of cash. Before you leave the house in the morning, list the items you expect to buy during the day. This means everything from a cup of coffee and the daily paper to groceries for supper or a new pair of sunglasses. The idea is only to carry the cash you need to make the purchases on the list.
Credit cards are convenient and while this is handy, it’s also a problem. For some of us, it’s a huge problem. It's easy to keep charging until you reach your credit limit. Leave your credit cards at home unless you need one for a planned purchase.
Pay your credit cards on time. Even a day late can mean higher interest rates and a lowering of your credit score. Be consistent and serious. Don’t give up.
Once you admit to your problem and think of ways to surmount it, life will have a better outlook. And think how much better you will feel knowing you have money for a rainy day.
Gary Foreman is a former financial planner who currently edits The Dollar Stretcher website www.TheDollarStretcher.com and newsletters.