Bad spending habits are probably the most significant cause of financial insecurity and poverty. If a person doesn’t tame their spending, they will affect their long-term financial goals negatively. What if you have financial habits you need to break? What do you do then?
Engaging in a financial fast is one of the strategies you can employ to break your bad financial habits. It will improve your financial health by saving more money and getting out of debt, which will make you richer.
A financial fast is when you don’t spend any money unless it is for basic needs such as food, shelter, medication, and anything else you absolutely can’t do without.
The following are the rules you should follow to make your finances fast effective.
- It should last at least 21 days: Experts consider three weeks an optimum period to clarify your vision on the difference between needs and wants. Observing a financial fast for less than three weeks is unlikely to achieve the desired goal. Fasting for more than three weeks, on the other hand, can help you save money, but it is not necessary for reorganizing your finances.
- Only spend on needs: Be careful not to engage in semantics in trying to redefine needs and wants; some people decide that needs are relative when the going gets tough. A visit to the barbershop isn’t a need, and neither is going out for meals. They are not needs even if they have become a part of your lifestyle up to that point. You should only spend on food, shelter, medication and other requirements such as transport to work and so on.
- Use cash: Paying using credit cards can desensitize you of the impact of your financial decisions. Paying cash makes you feel the pinch as you give the money, and it also keeps you from over-extending your spending since you are limited by what is in your wallet.
- Keep a journal: Your financial fast is supposed to help you identify the areas you need to change to create long-term positive spending habits. It is therefore essential to have a reference point when it is time to make concrete decisions. Keeping a spending journal will show you what you spent money on and how often. You should also note the purchases you struggle with the most, as this will show you your spending triggers.
A financial fast is beneficial because it increases your consciousness of your spending habits. This enables you to map out your trouble spots and develop strategies on how to counter them. A financial fast is also an excellent way to reduce any financial pressure you may be experiencing. You can use the money you save to pay any bills with which you are behind. The fact that all your payments are cash helps you to avoid credit card debt.
Angela Kovacs of Van Buren Township, Michigan is the founder and CEO of Credit Repair Gal. A credit restoration firm in Michigan.