How to Cut Back on Your Spending

Keep more money in your wallet.

Spending problems are common. Some people try to cut back on their spending but end up failing because they don't set -- or stick to -- strict rules for themselves. Others just need useful guidelines for ways to reduce spending so they can cover all of their bills or even start saving. If you're really ready to cut back, you need the discipline to commit to saving.

Things You'll Need

• Discipline

Instructions

1. Use cash. Some people feel that they're actually losing something when they spend cash as opposed to a pay-later credit card, so they will spend less if they use cash. You also could set aside only a certain amount of cash when you go out, leaving the credit and ATM cards at home, so you only spend to your limit.

2. Create a budget. Budgeting allows you to allocate each dollar of your income before you get a chance to blow it. If you set up and follow your budget, you'll be more in control of your spending and saving.

3. Get a hobby. Boredom gets a lot of people in trouble when it comes to spending money. Consider hobbies that keep you busy and fulfilled, and avoid those that require you to spend a lot of money on start-up or upkeep.

4. Calculate the real cost of a purchase. This is called opportunity cost in economics. If you earn $15 an hour and want to spend $60 on a new pair of jeans, the real cost of those jeans is four hours of your working time -- not including taxes taken out of your pay. Also, think about what else you could buy for $60 and compare its importance to a pair of jeans. Smart thinking means making more sound financial decisions and cutting back on your spending.

5. Buy used. Used items cost less than new items. Just make sure you do your homework to avoid buying junk or getting ripped off.

References

• CNN Money: Cutting Costs