If you’re in debt, getting a hold of your spending can feel overwhelming. On average, households with at least one credit card have more than $8,000 in credit card debt, according to Debt.org. The average student loan debt stands at more than $31,000. It’s no wonder people feel crushed by their cash flow.
Luckily, there are several ways to get a handle on your money situation. Here are some strategies for applying the financial brakes:
1. Track Your Spending
A little mindfulness can go a long way. Frequently, people have no idea where their money is going, and they have no idea how all those separate purchases add up. You might be surprised by how much you're spending each month on Amazon or at your local coffee shop. Try your bank’s app or an app like Mint to track your transactions and categorize them so you can see where your spending is going off the rails.
2. Set a Budget
If the word “budget” scares you, think of it as a spending plan. Once you’ve tried tracking your spending (in the step above), try chunking your money into big categories and see if there are places you can cut back. Make sure to include debt payments in your plan. Your bank may even provide insights on your spending and savings habits that could help.
3. Edit Your Recurring Charges
Once you start tracking your transactions, eyeball how many repeating charges are happening—from subscription services like Netflix and Hulu, for instance, to box services like StitchFix, to your gym or cable or other vendors. Think about whether you’re still using and enjoying those services. If you aren’t, unsubscribe!
4. Shop with a List
It’s easy to wander the aisles and think you’ll just grab what you need at the grocery store or big box store. But the less targeted you are, the more room you have to impulse shop. (Of course, you need another cute coffee mug!) Taking the time to write a list or use a list app on your phone can keep you focused and help you spend less overall.
5. Give Yourself a Waiting Period
Consider giving yourself a “time-out” before big purchases, whether that’s 24 hours or a week. If you’re thinking of buying something that costs more than X amount, make yourself ponder the purchase to ensure that you really understand the commitment and it’s not just an impulse buy. This might keep you from getting caught up in sales excitement and buying things you don’t need.
6. Try a Spending Fast
Take a month—or several months, or a year—and commit to buying nothing but the essentials. If you don’t need it, you don’t buy it. This will likely translate to less eating out, less spending on books and entertainment, no new clothes (unless they’re needed for growing children) and no optional home décor. This can help reset your sense of what’s “necessary” spending and you’ll save money in the meantime.
7. Use a Prepaid Debit Card (Or Cash)
Research has shown that it’s harder to part with cash than to pay with something with credit. If you use a finite spending source, such as a prepaid debit card or cash, you’re more likely to think twice about that impulse purchase, since it comes directly from your limited stash. Consider loading a prepaid debit card at the beginning of each week for certain categories of spending to help you stick to your budget.
8. Make a Debt Pay-Down Plan
If you’re just slogging away, making the minimum payments on interest-accruing debt, it’s time to get serious about what needs to be done. Use an online calculator to help you make a goal—how long will it take you to pay off that big debt, and how much do you need to send to it each month? Once you have a goal, you can set up an automatic debt payment each month in that amount.
On their own, each strategy can help you better manage your cash flow. If you implement several (or all) of these techniques, you'll find that you even more successful at keeping tighter reins on your cash—and making it work for you.