Winging it doesn’t work. Create a budget and stick to it. Save every receipt for one month to learn what you spend money on. Use that information to make a budget.
“Many people simply spend their money until it’s gone, with little knowledge of where it goes. Understanding where your money goes is key to gaining control over it, because you can identify areas where can cut back or redirect to fund other areas of importance,” says financial advisor Lorrie Delk Walker.
Start by creating a daily budget diary and checking in every day to monitor your spending.
When making purchases every day, ask yourself whether you’re satisfying a need or a want. The answer might make you put your wallet away. And one way to simplify these regular purchases is to automate bill payments: Don’t overthink recurring payments—especially those that have a set amount like cable or rent. When they are no longer an active decision, you’re able to spend that mental energy on other choices.
Of course, you’ll want to give yourself a cash allowance for things like gas, entertainment, clothing purchases, groceries, hair care, well-being necessities, and so on.
“These are areas that can be easy to overspend. Sticking to what you have the cash for helps avoid that,” she says. Have a contest with yourself each pay period to see how much of that cash you can hang onto. This builds discipline. Consider throwing unspent cash into a change jar or a separate savings account.
At the end of the year, use that money to pay debt, contribute to your emergency fund, or spend on something for yourself. “Commit to not making large purchases on the fly. This can save you tons of money because you remove emotion from the purchasing equation,” she says.