5 signs you’re spending your money wrong
You’re likely not spending productively if you shop online all the time, don’t know where your money is going, and have no spending goals.
You might believe you are doing well financially if you pay your bills on time each month. Are you making the most of your money?
Discretionary cash can be a wonderful way to unwind, treat yourself, or save more. It can also lead to financial problems.
If you have enough money at the end the month, you can choose how you want to spend, save, or invest it. There are six signs that your money isn’t being used wisely.
1. Although you know that you make more than you need to pay for basic expenses, you end each month in the red.
You can end up in debt if you aren’t careful about your spending.
You might be earning enough to cover your expenses but you may not be living within your means. You might find yourself carrying credit card balances if you spend more than you make. High interest rates will only increase your monthly cost of an item.
2. It’s likely that your money is not going in the right direction if you don’t know where it’s going.
Spending on something meaningful will make you remember what you did. It’s easier to forget if you buy meaningless items.
You can better see where your money is going each month and make informed decisions about where to cut back and where to invest more.
3. You are not moving towards your goals
While paying your bills is important, so are your future goals.
You can work towards your goals, whether you are looking to buy a house or retire.
Automatic Transfers are a quick way to stop spending too much before you can save money for your goals. To move money to savings, set up recurring transfers from you checking account. Increasing or setting up a 401k contribution with an employer can help you move that money from your paycheck to your retirement fund. This will keep cash out of your sight and mind and prevent you from spending.
4. It feels like you are drowning in clutter but the packages keep coming.
Online shopping is a sign that you are spending too much.
Jamie Friedlander, a writer, was able to stop her online shopping addiction and shared her story with Insider. She stopped rushing to purchase essentials online and started shopping for non-essentials.
She was able drastically cut down on her online shopping spending by taking a two-month break. “Every time I saw something that I liked, I thought to myself: Do you really need this in your life?” She stopped spending on frivolous items and was able to reprioritize her priorities based upon her values and needs.
5. There are no spending goals
You’re likely to spend too much on the wrong things if you just want to spend.
While spending goals can help you stay on track, they don’t have to be limited to dollar amounts. You might set a spending goal to save money on the vacation you want to take, or to buy your partner a gift for their birthday. It is important to set a spending goal that you will spend money on the most important things and not just the things that come up at the moment.
Spending goals are similar to setting a budget but should be more specific. Instead of spending money on less important and less meaningful items, look for ways to direct your money towards larger goals.