You probably spend money most days. Whether it’s Direct Debits, shopping, lunch or a drink after work, we don’t tend to go long without spending.
Some of these will feel like obligations (bills), some will feel like well thought out decisions (nice shirt at a nice price) and others you might not have even noticed.
While you don’t want to be worrying every time you tap your card, you also don’t want to feel guilty whenever you check your bank balance.
Here are some steps to avoid spending you’ll later regret.
1. Set (realistic) goals
Set yourself achievable goals and give yourself some leeway.
If you want to save monthly, for example, then set your goal within a range, such as £100-£300.
If you target a specific figure, like £200, but can only afford £100 one month, you might be tempted to skip that month’s savings altogether. Remember, saving something each month is better than saving nothing.
And when you’re setting goals, try to budget for some ‘wants’ too. Then you’ll have money set aside for guilt-free spending and you’ll be less likely to raid your savings.
Explore more: How to spend your income
2. Bring your goals to life
Setting tangible targets and keeping your financial goals front of mind can be a big motivator.
For example, ‘Savings account’ is not the most inspiring name. What’s it actually for? If it’s for a holiday to Japan, try labelling your savings account ‘JAPAN HOLIDAY’.
If your goal is to clear your debts, set yourself milestones where you can celebrate the progress you’ve made. For example, once you’ve cleared 30% you could head out for a nice (but not too expensive) dinner.
3. Automate your decisions
Deciding exactly when, where and how you’ll make certain decisions can reduce the temptation to veer from the plan.
For example, if you’ve decided to put money into a savings account or make a debt repayment each month, will you do it:
- the same day you get paid, or the first day of each month?
- on your phone, laptop, or in branch?
- at home, at work, or on the train to work?
Setting up a standing order prevents you having to make a fresh decision each month. Set it up so your savings or debt repayments are automatically deducted from your income.
This can help you work out how much you have ‘free’ to spend each month, knowing you’ve already contributed to your goal. Not only could this help you meet your goal faster, it may remove any guilt you feel for spending on things you enjoy.
If you’re an HSBC customer and have an iPhone or iPad, you can also use tools like Balance After Bills on our mobile app. It accounts for your regular bills to let you know how much money you could have left over.
4. Picture the alternative
A common source of regret can be realising after an event you could’ve done something differently. If you’re serious about reaching your goals, think about specific ways things could go wrong and how you’ll avoid them.
For example, if you’re saving for a holiday, tell yourself in advance: ‘If I’m tempted to buy a new jacket I don’t really need, I’ll remind myself that I’ll save the money for my holiday and stop browsing.’
It also helps to be aware of your own triggers. For example, does idly looking on shopping sites tend to result in you buying something you don’t really need – and might not be able to afford – over the next couple of days?
These triggers will differ from person to person, but think about how you can avoid situations that might cause you to spend money you don’t want to spend.
5. Set up alerts
Being aware of your spending is the first step to controlling it and spend alerts are a great way to keep track.
Some apps will allow you to set a limit for your spending in different areas and then send you a notification if you’re approaching or have gone over your limit.
Don’t forget, everyone spends a little more than they mean to sometimes, and that’s okay. But taking steps to avoid a regular sense of regret is a good way to start making better decisions.