Mastering Healthy Spending Habits and Budgeting

Improving your financial situation isn’t about running into good luck or getting a better job—though we all hope that happens, of course.

Whatever your circumstances, you have the power to take control of your money, get out of debt and start building financial stability and security. Ultimately, it comes down to how successfully you manage money and your attitude towards it.

People who rarely face financial troubles have two things in common: they have healthy spending habits and are good at budgeting.

The good news is you can become one of these people. All it takes is a willingness to change and a commitment to action. Are you ready to get started?

What Are Healthy Spending Habits?

Firstly, let’s look at healthy spending habits.

Healthy spending habits are actions and behaviours you can adopt to manage your finances in a responsible and sustainable way.

Unfortunately, healthy spending habits don’t come naturally.

Lack of know-how, circumstances or various social and emotional pressures can lead to us developing unhealthy spending habits, which prevent us from making the most of our money.

Examples of unhealthy spending habits include overspending, high credit card use, impulse buying and failing to save.

These unhealthy habits can also lead us into financial trouble. This, in turn, can develop into mental stress and a negative relationship with money.

This negative relationship may involve feelings of fear, shame, guilt, or anxiety around money and can drive further poor financial decisions, such as overspending, hoarding money, or avoiding financial responsibilities altogether.

Healthy Spending Habits to Adopt

If you think your spending habits may be unhealthy, here are some habits you can look at adopting:

• Develop a positive mindset - Educate yourself about money, practice gratitude for what you have, and seek expert help if needed.
• Set financial goals - Think about what’s important to you in the short and long term, for example, paying off debt and saving for retirement.
• Live within your means - Spending less than you earn is essential for long-term financial stability, so start tracking and reigning in your outgoings.
• Avoid debt stress - Borrow only if necessary, avoid high-interest debt, such as credit cards, and pay off any debts you do have as quickly as possible.
• Start saving regularly - Put money aside on a weekly or monthly basis. This will ensure you have an emergency fund and set you up for the future.
• Prioritise needs over wants - Focus on meeting your basic needs first, such as food, shelter, and healthcare, before spending on discretionary items, such as entertainment, travel and gym memberships.
• Grow and invest your money - How can you make your money work harder? This could include something as simple as a high-interest savings account.
• Check your accounts often - Review your spending accounts daily, savings accounts weekly or monthly and super and investments quarterly.
• Only carry what you need - To avoid temptation, remove credit cards from your wallet and only carry a single debit card and a small amount of cash.
• Plan ahead - This means anticipating future expenses, such as bills, groceries, mortgage and big-ticket items, and putting money aside to cover them.

As well as trying to maintain healthy spending habits, the second critical thing you should do to improve your financial situation is budgeting.

What is Budgeting, and Why is it Important?

Budgeting is the process of creating a plan for how you’ll allocate your income towards your expenses and financial goals.

It typically involves creating a budget that lists your expected income and expenses for a given period, such as a month or a year. This includes regular expenses such as rent or mortgage payments, utility bills, food, transport, and other necessary expenses. It also includes discretionary expenses.

Once you’ve created a budget, you should track your actual spending to ensure you’re living within your means. You should also identify areas where you may need to cut back or adjust your spending.

Ultimately, budgeting can help you take control of your finances, avoid overspending and ensure you have enough money to cover your expenses, work towards your goals and build long-term stability and security.

Tips For Successful Budgeting

Budgeting begins with doing the sums but requires an ongoing commitment to the process. Here are some ideas to help you stick with it:

• Start with a realistic budget - Be honest about your income and expenses, and make sure you base your figures on past statements and records.
• Track your spending - Keep a detailed record of everything you spend each day/week/month (even those cups of coffee) and review regularly.
• Refer to your financial goals - Make sure you prioritise your financial goals when setting your budget. This will help you focus on and achieve them.
• Be flexible - Be prepared to adjust your budget as needed. Life changes, and your budget may need to change with it.
• Avoid impulse purchases - Before buying anything, ask yourself if it’s really necessary and, importantly, if it fits within your budget.
• Involve your family - Discuss your financial goals and get everyone on board with the budget. This will make it easier to stick to.
• Reward yourself - Set aside money in the budget for fun activities or rewards for hitting smaller financial goals. This can help motivate you to stick to it.
• Use budgeting tools - Consider using spreadsheets, online apps, or personal finance software to help you create and track your budget. Check out our handy budgeting calculator.

Ready to Improve Your Financial Situation?

While healthy spending habits and budgeting are different concepts, they both help you improve your financial situation—and you can’t have one without the other.

If you want to start making positive changes, begin with your mindset (hopefully, this article has helped), then set your financial goals and create a budget.

Once you know what you’re trying to achieve and how much comes in and goes out each month, you’ll feel more in control and motivated to stop spending, start saving, and turn your money dramas around.

If you’re struggling to improve your financial situation and need help getting out of debt, get in touch with our team of debt solution specialists today on 1800 534 534 for professional, non-judgmental support and advice.