When that message of your salary or payment being credited to your account pops up after your month of hard work, nothing can match that excitement that you feel then. While getting this money credited to your account can be exciting, it is important for you to understand how to make use of that money. One of the very first and basic instincts that you may have is to spend that money. While spending money is not necessarily a bad thing, it is important to make sure that you inculcate good spending habits. Having poor or unhealthy spending habits can lead to financial burnout in the long run.

 While you may have highly ambitious goals about money, it is important to develop good habits when it comes to spending and saving money. Many individuals tend to think that accumulating wealth and meeting your financial goals is all about how you save money. While saving money is important, it is equally important to understand your spending habits and make sure that you have a healthy means of spending your money. This article focuses on 4 main spending habits that you should develop this year.

 4 Spending Habits That Work Wonders

There are many different money gurus and advisors who share their views and thoughts about saving money. However, most of them tend to discount the importance of spending habits and how they affect an individual’s finances. Here are 4 habits you should consider developing if you would like to have a financially secure year ahead.

1. Plan Your Spending Quota

One of the most important aspects when it comes to psychology with respect to money is that, when there is a surplus, there is a tendency to spend. So, determining your spending quota is highly crucial as it can help you mentally map out your needs and wants while accordingly allocating your finances. Moreover, if you are finding it difficult to adhere to your spending quota, you can try the option of auto-transferring your money to your savings. This can help remove the temptation to spend. Setting up these automatic transfers is one of the easiest ways to develop good spending habits. Finally, setting a monthly budget that is customized to your own likings and lifestyle can be tremendously helpful.

2. Avoid Impulse Buying

It goes without saying that impulse buying most often leads to regrets and a hole in your wallet. If you find yourself in this loop, it is time to take a step back and rethink your buying patterns. With several easily available payment methods such as mobile wallets, buy now pay later models, and online banking, it can be easier to make a purchase out of impulse. Impulse buying may keep you happy at the moment. However, it can lead to bad spending habits and deplete your savings account. You may end up spending thousands and may not realise while spending impulsively. So, every time you feel like making an impulsive purchase, give yourself a few days' time before purchasing.

3. Reduce Your Credit Card Spending

Swiping your credit card when visiting a store or using your credit online can be really easy. On the whole, having a credit card is not necessarily a bad thing. For starters, you can receive plenty of coupons and offers with your credit card. Moreover, it can also be a means to improve your credit score. To do so, you will have to be timely with your repayments and not have a negative balance. If you continue to use your credit card excessively, it can be challenging to repay your expenditure once it piles up.

Additional Read: How to Build Saving Habits

4. Plan Your Purchases

Another effective spending habit you can develop is by planning your purchases in advance. This can help you identify when you go off track with your spending. Instead of purchasing items and things on a need-basis, it can be a much more effective strategy to plan your needs and account for their expenses beforehand. You can make a list of exactly what you want. In addition, you can also allocate a certain amount for miscellaneous expenditure to allow yourself some flexibility.

 In a Nutshell

When it comes to meeting your financial goals, developing good spending habits is important. There are plenty of ways in which you can plan your spending beforehand so that you can stay on track. Ultimately, inculcating good spending habits can reduce your financial burden and can also help you accumulate the wealth you need. You can have a financially smart year with these spending habits.

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.