How do you motivate yourself to reduce your spending

[NewLifeOrNot]

Currently considering several big life changes. Think relocating, different jobs, possibly being a SAHM for a while etc. All of the various scenarios we are considering (including just staying where we are and not changing jobs etc) involve being more careful with money. However we are not really in any debt other than student loans and mortgage. We do currently have a balance on a 0% credit card but we have more than that amount in savings so could pay it off if needed. The reason I don’t want to yet is that we are still building up an emergency fund and I like to have a decent amount of cash on hand in case of emergencies (can’t put all emergencies on a credit card). Plus we are currently earning 4.5% interest on the cash and have a plan to pay off the credit card to ensure that we don’t pay any interest.

So my question is really how do you force yourself to stay on track when there’s no immediate incentive? All our financial goals are 3-5+ years away. I’m finding it too easy to be tempted by small frivolous spends, nothing huge just the odd meal out or new lipstick or whatever. We do have a certain amount budgeted each month for these type of spends but finding myself creep over each month and then not saving quite as much as I should be really. Grateful for any tips!

In your situation I’d save into an isa. Moneybox is giving 5.16 % atm for 12 months. Set up a regular deposit from your bank account on a monthly basis. It calculates the interest monthly so you’ll be able to see your money grow . Just because you don’t have ‘something ‘ in mind for the money doesn’t mean you shouldn’t save. Imagine never having to worry about money as you get older. Be sensible now and make your money work for you! Peace of mind is worth so much more than a coffee or a lipstick.

I use(d) cash for everything except bills. Found it much harder to part with cash. Now that I work less for health reasons, I'm so glad I got into the habit. Because now my budget is really tight.

And yes to this:

In monetary terms, this means establishing a detailed set budget for every payday ahead of time, and sticking to it - then you develop control of where the money goes, and are not trying to figure out where it's disappeared to.
Everything else follows on from this principle.

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For those who have used YNAB, doesnit get you to do a new budget every month or is it based on a yearly budget with sinking funds etc? In theory I already do the latter and I think this is partly why I am getting into such a muddle with the credit card. I try to budget for the entire year and then have sinking funds for various categories. For some stuff I manage not to go over budget like the annual holiday, I think because it’s easy to see how much I’m spending eg if I budget £2k then I might spend £500 on flights, £800 accommodation, £600 spending and £100 airport parking and travel insurance. However there are other categories I really struggle to keep track of such as Christmas, I might buy something I see on offer in June and then maybe a load of wrapping paper in the January sales and so on and so forth. So I can’t be trawling through every credit card statement for the whole year to work out how much budget I have left for Xmas by December.

Following

This might not work for you but something that works for me is making some rules about days when I just don't spend.

So, for example, in the school holidays on weeks I have off with the kids, I have a rule that two of the five days are no spend. And I try to be really strict about that - no quick hop on the bus to a park and an ice cream, absolutely no spend.

Or sometimes I will decide to go a couple of months without spending on lunches, coffees, at work and be really disciplined about it.

I budget and make it a personal challenge to stick to it.

I agree with the YNAB suggestion. I used to use it a while ago but once you’ve learnt the principle of the envelop system to you can apply it to a simple spreadsheet budget. That’s what I do, I categorise everything on there and it is all planned in advance. Managed to do a lot with a pretty low income using this approach. It’s really good.

For Christmas you would therefore say you want to spend £1000 in total for Christmas so it would encourage you to put aside money monthly, but you could still spend from it. You could put more in one month but not another, as long as you had £1k by 24th December.
It's good for sinking funds and you can change it every month depending on what you want to spend more or less on. The point is you have x amount of money in your account at this very moment and you want to spend it on y before you get paid again. The idea is that eventually you allocate next month's funds with this months.
It's worth watching the how to videos but I really do think it's worth a try with what you're trying to achieve.

I struggle with impulse spending. I've been doing the following little things for the last six months and am noticing I don't have the urge to buy unnecessary things as much as I used to:

• when I'm about to buy something, ask myself whether I really need it - I generally don't and that pause in thought stops me buying it.
• I have a list on my phone (with links) of things I want but don't need. I add to it all month then, at the end of the month if I have money left, I buy from it. Most of the time I've lost interest anyway.
• I have a supermarket shopping list on my phone that I update as I find I need things/meal plan, then I only buy those things - I find I come home with less cr*p
• I'm trying to build a capsule wardobe of good-quality items I really like and go with my other clothes, so I don't end up with things I wear once and realise I don't really like anyway

Are you on a credit card float? If you haven’t heard off it before….when your monthly credit card bill arrives and you pay it in full, how much money do you have for the rest of the month? Can you put the credit card away and live for the rest of the month with the cash you have leftover? Or once paying off the balance, do you NEED the credit card to pay for your groceries, etc until the next payday? If you depend on the CC to get you through to the next month, you’re on the credit card float. If you are on the float, you should ideally be aiming to get off of the float.

I use YNAB. I don’t have a Christmas category, but I have a Gifts category. I allocate a set amount each month, and the digital envelope fluctuates up and down as I spend/add my monthly contribution, if that makes sense. It’s not a new budget each month—at the end of March, what I had at the end of the month remained in that digital month and rolled over on 1 April. And I will add more at my next payday, if that makes sense.

maybe I need to stop using the credit card. However it does earn us about £40 every three months in vouchers. If I could just be a bit more disciplined then it wouldn’t be a problem.

I bet you will be saving considerably more than £13 ish in a voucher per month if you stop the credit card.

The " treat" is not that when you are buying treats constantly and it costs £500 you don't really want to spend -not judging, it's easily done.

It's possibly emotionally driven overspending?

You said you buy chocolate when you are tired?
Usually in emotional overspending you are either using the things you buy to deal with emotions or to take the place of self care

The other possibility is just not tracking your spending?
A prepaid card like Chase or Monzo is helpful to load with your treat money( amount equal to DHs) and you just take that card for emergencies if you are popping out.
Once it's gone it's gone!

@Chatonette hmmm I’m not sure. Maybe I am on the float because from our wages I wouldn’t be able to pay the mortgage, pay all the bills, pay the credit card and then have enough to do all our monthly spending for the next month. I suppose we are always a month in hand in that respect hence why I can only ever save what is leftover once I’ve paid mortgage/bills/credit card. However we do have enough in savings that we could stop using the credit cards immediately if we wanted to. Maybe that’s what I should do but that takes me back to my earlier comment of not wanting to put all purchases on a debit card. And I definitely don’t want to move to using mainly cash, in fact I don’t think that would even help me as I barely go to physical shops most of the time. I do all my grocery shopping online, clothes are from online shops, same with make up/toiletries, most kids stuff, or household things off Amazon etc.

This is why I use YNAB—like you, I prefer credit cards for the purchase protection, etc, and YNAB ensures I’m not on the CC float. It also provides me with my digital cash envelopes/sinking funds, so I have clear budget/category limits. Otherwise it’s too easy for me to mindlessly swipe my card and think about it later. My spending is 100% more mindful on YNAB.

This is interesting, I haven't heard this phrase before, but I see what you mean.

I used to use my credit card for everything then pay off the total automatically every month because I got 0.5% cashback, but now I get more cashback from my current account, so I use that instead. You do get extra consumer protection if you use a credit card for purchases over £100 though, so I do try to use my credit card for these if I remember, and I can see that this directly improves my credit score as well. I really don't like how in arrears spending on a credit card feels - you buy the item, then your monthly bill a couple of weeks later includes it, then you pay for it a few weeks after that.

Yes, the idea of the CC float is that you’re spending future money. On the float, you’re counting on the next payday to cover the spending over the past month, rather than using a paycheque to pay for the coming month IYSWIM. I prefer CCs myself, but I use a budget to track, which means I’m never spending what I don’t have available in my current account. I’m not in the float, so I can pay off my CC balance in full the day before payday. (FYI, I used to be on the float, but got out of it.)

OP, DH and I allocate ourselves a reasonably small personal allowance in a separate account every month, and we use this to pay for anything we'd like that we'd feel a bit guilty for buying from family money. It's difficult to draw the line sometimes, but I often spend mine on books or hobbies or whatever, and DH usually spends his on computer games. It works really well for us - we both feel like we can buy the things we want, but sometimes we might need to wait until the following month, which isn't really any great hardship.

Stop using the credit card. Most people overspend on them as they think repaying it is some time in the future and not immediate. Even if you repay in full it means that you don't have as much to spend leaving you short of money to save. Using a debit card means you see immediately how much you have left.

OP I think I am actually you LOL, could have written so much of every post myself. But some of the advice here is excellent- thank you re loyalty CC comment by the OP. My JL CC has had me also thinking it’s worth it for the vouchers. Putting it like that @Whatifthehokeycokey is sobering.

Sorry, by the PP re loyalty CCs, not OP

I've never heard of Credit Card Float
Is it a US term?

We use a CC for all monthly spending, never leave more than a few £ in our bank account but we are extremely sensible spenders and save double our CC bill each month so I don't think that applies to Op either if she has savings.
I put my personal spending on a pre paid card which has 1% - 5% interest on purchases depending on the shop
We get around £500 in vouchers a year as well .

We still use a credit card for certain purposes for the protection, but immediately pay it off from our joint account so that it's still within that month's budget. I used to be on the "credit card float" years ago and it made me realise how slippery it is, so I am adamant that we use our debit card mostly and more easily keep track of whether we're in the black