Healthy Spending Habits

Limiting credit card use is a good habit.

Limiting credit card use is a good habit.

Nothing has a bigger impact on your finances than how you choose to spend your money. Even millionaires can go broke by spending beyond their means. Developing healthy spending habits early in life can help you achieve financial goals like saving for retirement, home ownership and putting your children through college.


Planning ahead is an essential part of financial responsibility. A budget is a financial plan that lays out all of your monthly income and details how you plan to spend each dollar of income that you earn. Budgeting can help you make sure you have enough money to cover all of your expenses and determine exactly how much disposable income you may spend on luxuries like entertainment and shopping.

Monitor Spending

Creating a budget is often easier than sticking to it. You might plan to spend a given amount on entertainment and going out to eat, but your actual spending habits may deviate from your plans. Monitoring your spending habits by tracking account use and keeping receipts can help you determine whether you actually follow the budget you create. If your spending in certain areas exceeds your budget, reign in your spending or create a new budget that accounts for shifts in spending habits.

Credit Card Use

When you use a credit card, you are buying things with someone else's money. Borrowing money is expensive because you have to pay interest on debt in addition to the original amount that you borrow. Paying for purchases with a checking account or cash is a good spending habit because it prevents you from taking on debt. If you want to use credit cards for convenience, pay off your cards in full each month to avoid interest and accumulating a balance. Once you rack up a large credit card balance, it can be difficult to escape the debt.

Shopping Lists

Impulsive spending is one of the worst spending habits that you can have. Spontaneous purchases can lead to buyer's remorse and dwindling back account balances. If you buy things that you never planned to purchase, you are more likely to spend beyond your budget and take on debt. Creating shopping lists before you go to the store and sticking strictly to the items on the list is a healthy spending habit that can prevent impulsive spending.


About the Author

Gregory Hamel has been a writer since September 2008 and has also authored three novels. He has a Bachelor of Arts in economics from St. Olaf College. Hamel maintains a blog focused on massive open online courses and computer programming.

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