Without good habits in place, it can be immensely challenging to live within your means and avoid overspending. Spending more money than you take in can be a slippery slope for your financial health, potentially leading to poor credit, increased debt, or difficulty paying your bills.

If you’re looking to curb your spending, the practical course of action is to cut back on day-to-day expenses and create a budget. Of course, this is easier said than done. That’s why we’ve compiled our best tips and advice for forming good spending habits.

Cut back on day-to-day spending

In theory, not spending money on unnecessary things should be simple. And yet, since spending money is a part of life, it can be hard to tell the difference between essential and non-essential purchases. The following ideas can help you know where and how to cut back.

1. Cut what you can live without: Generally speaking, must-haves include food, transportation, housing payments, utilities, healthcare costs, and childcare. In other words, it’s what you need to get by. Take note of your daily spending and consider cutting anything that doesn’t qualify as a must-have. Some things, like clothing, fall into a gray area. While you technically need clothes, you might not need any new pieces at the moment.

2. Prepare your own food: You have to eat at least three times a day, which can really add up if you buy all (or even some) of your meals out. One of the best ways to control your spending is to prepare all your own food. This goes for coffee, too — spending $5 a day on a latte can cost you $150 a month. If you’re not sure where to start, tons of easy recipes and meal-prep ideas can be found online.

3. Stick to a list: Whether you’re shopping for groceries or household items, making a list before heading out the door can help you sidestep impulse buys. Even small items can really add up on your checkout total.

4. Keep your credit cards at home: When used responsibly, credit cards can be a helpful financial tool. But the temptation of a line of credit can also lead to overspending. You might want to leave your credit cards at home to prevent yourself from using them. If you tend to shop online, removing any auto-filled credit card numbers from your browser can help you avoid using them altogether.

5. Calculate the true cost: When you want to buy something, it can help to consider its “true cost.” This means calculating how long it would take you to earn the money to pay for it. For instance, if you make $18 an hour and want to buy $80 shoes, the true cost of the shoes is almost four and a half hours of your time. In some cases, this calculation might be enough to make you reconsider a purchase.

6. Sleep on it: Another approach that can help you avoid overspending is to wait at least a day before deciding to buy something. After the initial excitement and draw to a purchase wears off, you’ll have a better idea of whether it’s worth your money.

3 essential steps to budgeting

Budgeting is often key to controlling your spending, and it doesn’t need to be complicated. Here’s the 3 basic steps: after tracking your current spending habits and then reviewing your recurring expenses, create a budget outlining where your money will go moving forward.

1. Track your spending: If you’re like a lot of people, you might find yourself wondering where all your money goes. When you track your spending for a month, you might be surprised by how much unnecessary purchases add up.

2. Review your recurring expenses: Recurring personal expenses include things like your phone and internet bills, TV streaming services, magazine subscriptions, and gym memberships. While some expenses are must-haves, you can probably live without others. Consider canceling any unneeded recurring charges to cut down on your monthly spending.

3. Create a budget: With a budget in place, you can prioritize your must-haves and plan where your additional income will go each month. You might allocate a certain amount to building an emergency fund, saving for retirement, paying off debt, or saving up for a big purchase.

In creating your budget, don’t forget to budget for fun! Though budgeting is all about controlling your spending and making sure you can afford the things you need, enjoying your life is important, too. Sometimes, having fun costs money. We recommend making room in your budget for entertainment and non-essentials, like a date night out, brunch with friends, or new clothes.

With smart money habits and a budget in place, you can control your spending and improve your financial health. Here at Patelco, we want to help you spend responsibly, manage your money, and work toward your goals. Patelco Online offers easy-to-use budgeting tools and can sync your accounts with platforms like Mint or Excel. You’ll also get a real-time snapshot of your balances, as well as any upcoming payments and money transfers.