A financial fast may be just what you need to get absolute control over your spending. Some people may be in denial about this but your spending habits can make or break your finances. Do not underestimate what it can do to your personal finances. If you do it properly, your spending can help improve your financial situation. But if you do not practice responsible spending, you might end up destroying everything that you have built so far.
When you overspend, that means your expenses are more than your income. It is dangerous to live this way because you might end up with so much debt that you end up having to declare yourself bankrupt. If that is not scary enough, your debts have the power to destroy your future.
A survey reveals that overspending and credit card debt usually go together. After all, if your income is not enough to cover all your expenses, the natural thing to do is to rely on credit to pay for whatever is lacking. Among all the other type of debts, credit cards are the easiest to access. These also have the highest interest rates. The same survey revealed that 2 out of 3 of the respondents overspend by $100 each month. If this continues, it will not be surprising if you are drowning in debt after a year.
If you do not do something about how you spend, that can quickly lead to a financial crisis. But if you learn how to curb your spending urges, you can easily improve your financial situation.
Apparently, one of the best ways to take full control of your spending is to go through a financial fast. But what exactly does that mean?
How can a financial fast help control your spending?
Just like fasting means there will be no intake of food and water, financial fasting means you will not spend anything. Or at least, you will not spend on anything unless it is vital for your survival. There will be no spending on comfort or anything that will make your life convenient.
The goal here is to help you get used to not spending on unnecessary things. It will teach you to be cautious of where you will spend your money and think twice before you purchase something.
If you know how Americans spend their money, you will realize that the whole nation is in great need of a financial fast. According to a survey, 95% of respondents believe that Americans waste more money than they can afford. Among the expenses that waste money include throwing expired food, eating in fast-food restaurants, overpriced beverages, eating out, and so many more.
Obviously, these are the people who are in need of a financial fast. But what exactly are you allowed to spend on while you are fasting?
Let us start with the biggest expense that you pay for each month. Downsizing your home is one of the drastic things that you can do. Living in a smaller home may seem like a difficult thing to accomplish but it will bring a lot of benefits.
First of all, you will be paying a lot less in rent – or even your mortgage. Not only that, but you will pay less in terms of utility bills. It will be cheaper to heat or cool a smaller place. You also need less stuff to fill the space. It will lower a lot of expenses. And if you live in a small house, you will think twice before you buy anything new – simply because you do not have space for it. If you really have to buy something new, you need to dispose of something to make room for it. When you dispose of it, you can sell it to get back some of the money for your new purchase.
Food is a necessity but you might be surprised that a lot of people waste huge amounts of money on this. Obviously, you cannot include this in your financial fast. You need to eat to survive. But you need to make sure that you are only spending what is necessary. Start cooking your meals from scratch. It is always cheaper to do that. Make sure that you do not have leftovers. And even if you do, do not waste it. Leftover chicken can still be used to create a salad or soup.
Until the financial fast is over, you have to stop dining out or going to fast food restaurants. Be strict about this. Even if there is an occasion, you can prepare something at home. You need to stick to your fast.
If you can save on gas, find ways on how you can do it. If you can use public transport and if it will lower your expenses, that is something that you can do while in the midst of financial fasting. In case you have to bring your car, try to see if you can carpool with anyone.
Another expense that you make on your vehicle is in repairs. It can be quite expensive especially if you need car parts that are quite costly. While it is hard to avoid these expenses, just make sure to minimize these. Make sure you do not miss out on regular maintenance. And get to know how to use your car to make it fuel efficient.
While this may not be necessary for your survival, it has to be paid as usual. Skipping on payments will cost you more money in the long run. But that does not mean you should pay the same amount as usual. You can opt to get a reduction of your balance through debt settlement. Or you can try to get a lower monthly payment through debt consolidation. There are options that will help you spend less each month without making your balance grow.
Insurance, retirement, medicines, taxes
There are other expenses that you are forced to pay for. These include insurance, medicines, taxes, and other expenses that will make your future more stable. These are okay. But you need to categorize what is really important. You want to make sure that you are putting your money where it is really needed. If it can be postponed, then do it. But make sure to set a date when you will resume paying for these expenses once more.
Obviously, going on a financial fast means you have to cut back on entertainment expenses completely. If you feel torn about it, you need to ask yourself if it is really something that you need. If not, then try to look for alternatives that will not make you spend.
For instance, if you love eating out because you like a change in ambiance, why not go on a picnic? You will have the change of scenery that you like but you can cut down on expenses because you will be preparing your own food.
What is necessary for some people may not be the same for you – so this list will vary. The rule is to help you get used to the idea of spending less than what you earn. The truth is there are times when it is okay to spending more than your budget. But that is not applicable when you are in the midst of a financial fast.
Tips to implement financial fasting to control spending
The sad truth is, a lot of us were not taught how to spend our money properly. One survey reported that consumers believe their financial habits were heavily influenced by their parents. Some blamed their economic situation while growing up. But regardless of what the influence is, it is important to know that you can change your spending habits.
While you are in the midst of a financial fast, it is the perfect time for you to change your ways. There are other things that you can do to ensure that your efforts to fast will be a success. Here are some of them.
- Make a list of the categories that you can spend on. Then, identify the rules that will justify what you can spend under each category.
- Identify what is a want and a need. This will make things easier for you to decide on what are your priorities.
- Learn how to DIY some of the services you used to pay for. These include working on your garden or maybe even getting your hair trimmed.
- Focus on how much you can save. Sometimes, this helps in motivating yourself to spend less.
- Set up financial goals. Admittedly, a financial fast can be torture. Having goals will help you focus on what you have to do despite the temptations and difficult sacrifices.
In the end, this financial fast should help you manage your finances better. You should have a better understanding of what you really need in your life and what you can live without. In fact, you might be surprised that you can live without a lot of things. As you see your bank account growing, you will realize that all the sacrifices are worth it.