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This is because having a significant amount of “unhappy spend”, will make us (you guessed it) unhappy. That sick feeling you get when you know you should check your bank statements could be a sign that you aren’t proud of the decisions you’ve made. Taking a closer look, while initially uncomfortable, can help you identify things that either make you unhappy or just plain don’t recognize.
Good personal finance habits doesn’t mean giving up on your personal wellbeing and happiness. Start by thinking about transactions that make you actually happy. If you love Starbucks, then you shouldn’t say “no” to your daily coffee trip; find areas of your budget that you don’t absolutely love, like maybe going out to eat often.
👍 Happy spend includes:
👎 Unhappy spend includes:
When it comes to budgeting, starting with classifying all transactions as “happy” or “unhappy” can lead to better habits over time.
If you’re running low at the end of the month, or you’ve spent more than you earn in a month, then it might be worth looking into your spending patterns to see where you could potentially save money in the following month.
🚩 What are the red flags when it comes to bad spending habits?
The key is to know where you’re spending your money, whether it’s on food, drinks, entertainment, or clothing. Once you know that, you can identify areas where you can save. For example, if you’re spending a lot on a gym membership and not going, it might be cheaper to buy basic equipment and work out at home instead. Or if you’re purchasing a bunch of things on Amazon you don’t end up using or don’t 100% work - return it! Amazon usually has a very easy return and credit policy.
When you buy new products or services, make sure you know what customer protections are available to you - if you’re buying a pair of new Nikes, they actually come with a 2-year warranty; if you’re buying a new Mac, you can try it out for 14 days and return it if you don’t like (even if you’ve used it during this time!). On top of that, if you pay with your card, you’re eligible for chargeback in case something goes wrong!
Another reason to keep track of your spending is avoiding duplicate charges from merchants, or higher charges than you expect followed by an initial authorization e.g. from a hotel or a car rental. In that scenario, you can get in touch with the merchant directly and ask for a refund, or, if unsuccessful, you are still able to get help from your bank.
Keeping track of your spending is the first step towards taking charge of your personal finances, but will also help you save lots of money in the long term. Starting your budget by identifying “happy” and “unhappy” expenses can be the key to making budgeting less soul-sucking and restrictive.
Debbie is an app that uses behavioral psychology and prizes to help you pay off debt for good. The app rewards you for paying off debt with lower interest rates on your current credit, as well as cash. Start our free money psychology course today to get qualified. Start Now →
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