How Can I Stop Myself Spending too Much Money?

There are some of us that find it difficult to not spend money. Obviously, we all need to spend money on some things. We need to buy food and pay our bills, pay our rent or mortgage and transport to work as well as other essentials. However. Beyond those essentials, we will often spend extra money on all sorts of luxuries. This might be things such as going out, eating out, paying for hobbies, holidays and all sorts of things. These things can be extremely pleasurable and make working worthwhile and also help us to relax. However, if we are spending too much money then it can lead to problems. It can mean that we do not have any savings to use for spending on emergencies, that we have to borrow money to get through and we can end up just losing control of our money. This can be distressing but spending can get to be a habit or it can sometimes just be hard to figure out how to manage everything that you need and want with the income that you have. However, there are things that you can do which will enable you to cut down on your spending.

Write Down Everything you Spend

The first thing that can help a lot is to write down everything that you spend. You can do it on a spreadsheet or on paper but note down everything thing that you are spending money on. This is everything that leaves your bank account, such as standing orders, direct debits and cheques and then everything you buy with debit cards, credit cards, cash etc. Just make a note of everything and this will help you to see exactly what you are buying. This is an important step as many of us know that we are spending too much but are not really sure on what. Therefore, noting it down will allow you to clearly see what is going on. It might feel like you are going to have to give up things you like, but this may not be the case, so be honest with yourself.

Prioritise Your Spending

Once you have a list you will be able to identify what you need to buy. There are certain things that we have to pay for, even if we do not really want to. Things such as council tax, no guarantor loan repayments, utilities and contracts. It is important to think about all of our commitments and necessities and make sure that we have enough money for those first. Then you will be able to see how much money you have left. You might want to split that money left into categories. For example, you might want to put some in a savings account, use some to repay debt, some to pay for evenings out and things like this. This where you get to choose where you spend your money so you need to do it in a way that will enable you to feel in control and not deprived,

Compare Prices

Of course, the above stage assumes that you will have some money left when you have paid for everything that it is essential for you to buy and this may not be the case. If you are struggling with this, then something helpful that you can try is to compare prices and make sure that you are not paying more than necessary for items that you are purchasing. You may find that if you swap providers, brands, insurers, retailers etc you could get a better price. Even if you are not struggling, it can be well worth checking this out to see whether you are paying more than necessary as you could find that you can save a significant amount of money if you switch to paying less for lots of items.

Is Fixed or Variable Interest Better for savings?

When you have savings, it is likely that you will always be on the look out to make sure that you have a good interest rate. These vary a lot and you will find that there are big differences between interest rates with different accounts. Also, some will have a fixed interest rate and others will be varied. It is worth considering whether you feel that a fixed might be better than a variable rate and what the advantages and disadvantages of each might be.

Fixed Rate Savings Accounts

Fixed rate savings accounts will hold their interest rate for a specified period of time. They will generally be bonds. But there may be others as well. It is good to look into them carefully though as you may find that the terms are quite restricted. For example, you may have to keep your money in the account for a certain period of time. You may not be able to withdraw it at all or you may only be able to withdraw a certain amount or at certain time or a certain number of times. It sounds a bit complex but this is because the rules may vary depending on the particular bank or building society that you use. If you do make withdrawals you may find that there is some sort of penalty. Often there is a bonus with these sorts of accounts, added to the interest and you could lose this.

It is also wise to look carefully into the interest rate itself. The rate will be fixed, which means that it cannot go down for the period stated. This can be especially good if you want to make sure that you are protected form rates falling and if you predict that this might happen during the time that your money will be in the account. Of course, it is not easy to predict this but you may have a few ideas. If you think the rate is going to rise, then it could be better to be in a variable rate as then you may find that you are paid more interest. However, it all depends on how good the fixed rate percentage actually is compared to other rates that are available. If it is significantly better then it might be worth going with anyway.

Variable Rate Savings Accounts

You will find that there is more of a variety of variable rate accounts and many of them are instant access. This means that you will be able to draw your money out of the account at any time. This can be very useful if you need money in an emergency. However, it often means that the interest rate will be lower. So, you will need to decide whether you feel it is worth it. Of course, if you compare rates often, then you will find that you can check and see whether your rates are competitive or whether you would be better off moving your money to somewhere that pays out a lot more. You will find though, that if the Bank of England reduce the base rates, then it is highly likely that your variable rate will go down. Therefore having a fixed rate will protect your from this.

It can be a tricky decision as you need in some ways to be able to predict what the rates will do in the future. If you tie yourself into a fixed rate and then rates go up you may miss out on that increase in rate. However, if you do not tie yourself in and rates go down, you could lose out on interest as a result of this.