Understanding Your Spending Habits

Alakae Rodriguez |

Understanding your spending habits is one of the most powerful steps you can take toward financial freedom. Every coffee run, online order, and subscription tells a story about your priorities, routines, and even your emotions. Yet most of us move through our daily purchases on autopilot, rarely stopping to ask: Why am I spending this way?

 

Habit breaking strategies

 

  • Prepare your mindset: Find what is most necessary in life for you to be happy. Nailing this down will help you plan how to spend money intentionally. The key here is to put your finger on what's most necessary in your life for you to be happy.
  • Consider Experiences over things: When we spend money on an experience, we build anticipation and excitement. We have something to look forward to. 
  • Have spending goals: This is an effective approach strategy to make saving fun– because you're planning to spend it on something that's important to you. Open a savings account for whatever it is you want to do and give it a name that reminds you of the goal. 

 

Money saving tips

 

  • Create a budget: One method is the 50/30/20, 50% of your after-tax income goes to necessities, 30% goes to wants, and 20% goes to savings and any debt payments over the minimums. Another method is the 60/30/10.
  • Track Spending: Saving money is tough if you don't know how much you've been spending in the first place. Keep track of your monthly cash flow. Your income minus your expenditures. Many budget apps can help you track spending.
  • Keep savings in a high-yield savings account: Put your money in a high-yield savings account. This type of account earns an above-average interest rate on deposits, which can help your bank balance grow faster than with traditional options.

 

At the end of the day, your spending habits tell a story about your priorities, goals, and values. By becoming more mindful of where your money goes, you’re not just managing finances, you’re shaping your future. Small, consistent changes today can lead to greater financial freedom tomorrow.