I’ll be the first to admit that managing credit card spending hasn’t always been my strong suit. I’ve succumbed to boredom shopping, indulged in excessive grocery store snacks, and fallen for sales, often buying items I don’t truly need.
Even as inflation shows signs of slowing down, the overall cost of living remains high. Recent data reveals that by the end of May, Americans were spending an additional $460 per month on various expenses compared to the previous year. Escalating inflation is compelling many individuals, myself included, to reassess their spending habits and reconsider their purchasing priorities.
Recognizing the need to adapt to the rising costs of living, I decided to take action and address my credit card spending. It became essential to develop healthier financial habits and break free from detrimental spending patterns. Despite ongoing debates about whether the U.S. is entering a recession, the impact of inflation is undeniably affecting everyone.
Motivated by this realization, I embarked on a personal challenge, focusing on prioritizing needs over wants in my spending habits. Over the course of a few months, I conducted an experiment to identify areas where I could cut costs in my credit card spending. After just one month, I was astonished to discover that I had successfully halved my credit card bill. This trend continued into the second month, highlighting that change was not only possible but also more attainable than I had initially thought.
For those grappling with credit card spending, implementing a few straightforward lifestyle adjustments can lead to significant savings—potentially amounting to hundreds or even thousands of dollars, depending on one’s individual circumstances. Here’s a detailed account of my approach and some expert advice on how others can adopt similar strategies to achieve financial success.
Step 1: Eliminating Shopping Apps from My Phone
Recognizing my tendency to impulsively browse and shop through various apps on my phone, I acknowledged that having immediate access to online purchases increased convenience but also heightened the likelihood of unnecessary and impulsive spending. Specifically, apps like the Express clothing app would often lead to spontaneous dress purchases. To instigate substantial changes, I took the decisive step of removing most major shopping apps from my phone, retaining only one or two that I utilized regularly, such as the Target app for curbside pickup groceries. The absence of these apps on my phone diminished the allure of impromptu purchases, providing a sense of liberation and improvement. Additionally, this action had the unexpected benefit of reducing my daily phone usage by up to an hour.
Step 2: Establishing a Modest Allowance for Non-Essentials
Rather than adopting a complete abstinence approach towards non-essential purchases, I opted to grant myself a modest monthly allowance ranging from $100 to $150 for indulgences that fell into the ‘want’ category—items I liked but didn’t necessarily need, such as takeout meals or new makeup. This approach allowed me to proceed with my financial experiment without feeling excessively constrained, introducing changes in manageable increments. The strategy proved effective in enabling occasional treats while remaining mindful of the impact of rising inflation.
Levon Galstyan, a certified public accountant with Oak View Law Group, suggests simplifying budgeting by employing a straightforward formula. Begin by compiling a comprehensive list of all expenditures, organizing them into broad categories such as insurance, subscriptions, food, and home supplies. Subsequently, categorize each expense as either a ‘need’ or a ‘want.’ Once the totals for each category are computed, set priorities accordingly. For the ‘wants’ category, establish a reduced yet reasonable allowance. While my chosen range of $100 to $150 proved effective for me, the optimal amount may vary for each individual.
Step 3: Implementing Pre-Made Grocery Lists
The grocery store emerged as a significant challenge in curbing my spending tendencies, with impulsive snack purchases, excess food buying, and the allure of buy-one-get-one-free wine sales contributing to unnecessary expenditures. To address this issue, I introduced pre-made lists for grocery shopping, meticulously detailing the essential items required and refraining from superfluous purchases. I allowed myself the flexibility to buy one non-essential item, emphasizing restraint beyond that single indulgence.
Upon the initial implementation of this strategy, I observed a substantial reduction in my grocery store expenses, ranging from $25 to $75 per trip, solely by circumventing impulsive purchases. This approach not only resulted in financial savings but also minimized food wastage, ensuring the consumption of all purchased items. Additionally, I consciously opted for non-name-brand items, particularly choosing the store’s own 365 brand at Whole Foods, resulting in further cost savings.
Scott Nelson, CEO of MoneyNerd Limited—an online platform dedicated to financial education—endorsed the practice of avoiding name-brand products as an effective means of expenditure reduction. Nelson emphasized that opting for the store’s own version of products like Doritos could cost significantly less than their brand-name counterparts, with negligible differences in quality. He also recommended leveraging store reward schemes, utilizing coupons, and collecting gift cards as supplementary strategies to alleviate overall spending.
Step 4: Eliminating Boredom-Driven Shopping
This proved to be the most challenging phase of the experiment for me. My penchant for perusing Home Goods for home decor inspiration often culminated in impulsive and unnecessary purchases. Despite my genuine enjoyment of such activities, it became evident that they led more to unplanned spending than creative inspiration. Consequently, I bid farewell to Home Goods and other stores that triggered boredom-driven shopping. In lieu of these excursions, I redirected my time towards more constructive endeavors, such as rearranging items in my home. This not only fostered a realization that I possessed everything essential but also helped me resist the allure of unnecessary acquisitions.
Brendan Sheehan, managing director at Waymark Wealth Management, emphasized the social nature of shopping trips and the strategic methods employed by stores like Costco, Sam’s Club, BJ’s, Target, and Walmart. According to Sheehan, these establishments entice customers with a shopping list of 10 items but strategically encourage them to leave with 20 items, comprising both necessary and impulse purchases. He shared valuable advice received, advocating for a 50% reduction in the frequency of these visits, leading to longer shopping lists but a decrease in impulsive spending.
Step 5: Resisting Temptation from Sales
The allure of sales, often featuring enticing banners boasting discounts like “40% off,” can be irresistible. While sales present an excellent opportunity to save money, especially on significant purchases, they can become counterproductive when the discounted items aren’t essential, resulting in unplanned expenditures. Brendan Nelson recommends adopting a cautious approach by sleeping on significant financial decisions. Taking the time to reflect on the necessity of a purchase before succumbing to impulsive desires is a prudent strategy. During my experiment, I abstained from participating in sales unless the purchase had an immediate and practical utility, ensuring a more intentional and mindful approach to spending.
Step 6: Prioritizing Genuine Needs
Achieving success in this experiment necessitated the cultivation of tunnel vision, redirecting my focus exclusively towards genuine needs while allowing a modest allowance for discretionary purchases. This entailed a recalibration of my mindset, honing in on essentials such as pet food, home supplies, and other fundamental elements that sustain our needs and overall quality of life. Conversely, it meant eschewing superfluous items like excess clothing and frequent carryout orders. As the experiment unfolded, the absence of these non-essential expenditures revealed their limited impact on my overall quality of life.
The concluding results of the experiment were nothing short of surprising, showcasing substantial savings and a consistent halving of my credit card bill. The invaluable lessons learned during these past few months have equipped me to navigate the challenges posed by inflation and the escalating costs of living. I am committed to incorporating these insights into my financial habits, irrespective of economic circumstances. This strategic approach enhances my financial acumen, promotes healthier spending habits, and facilitates savings accumulation. It is crucial to acknowledge that individual financial strategies may vary, and what proved effective for me may not be universally applicable. Thus, tailoring one’s spending patterns to align with personal circumstances remains imperative.