If you’ve been overspending and taking out too many persona loans, cash advances, and personal loans, you might need to go on a financial diet. Just like a regular diet, with a financial diet you take in less (shopping) and you practice some good financial fitness habits for better financial health.
Evaluate where your money really goes. You probably think you know where your money goes, but do you really? Take a look at your bills – how much are you really paying each month on debts, eating out, entertainment expenses, and other costs? Knowing where your money goes is the first step to eliminating unneeded spending.
Cut out what doesn’t give you lots of pleasure. If you are paying for cable channels you don’t watch, a newspaper you don’t read and magazines you toss after one glance, you’re throwing your money away. If you head out for coffee every week and don’t love it, you’re wasting your cash. Cut out everything you don’t love that you spend money on and you’ll have more cash for truly exciting opportunities.
Find less expensive alternatives. Once you cut out all your un-pleasurable money activities, take a long look at those things that do give you pleasure. Which ones can you replace with cheaper options? If you love eating out, maybe you can organize a potluck dinner with friends or try out special recipes at home. If you love movies, check out your local library to see whether they have free movies you’re interested in seeing (rather than paying more for video rentals).
Try short-term money “fasts.” For one week or one day, try to avoid buying anything but the absolute necessities. Make a list of things you can do instead. Make it a game: see how little you can possibly spend in a one week period. It’s a great way to build your savings muscle while saving cash.
Shape up your financial regimen. Savings alone won’t get you to your financial fitness goals. Head to the library and read about money management, savings, and investments. Maybe you can invest in CDs, real estate, stocks, or other types of assets. Practice putting cash aside for emergencies, retirement, and investment opportunities.