Yet, even with inflation finally starting to slow down, the cost of living remains high. Data shows that by the end of May, Americans were spending an extra $460 per month on food, fuel, and more, as compared to a year before. Red-hot inflation is forcing many people, myself included, to reevaluate the way they spend and how they prioritize their purchases. I knew that in order to keep up with increasing costs of living, I had to do something about my credit card spending. It was necessary to learn healthier ways to manage my money and break out of bad spending habits. Although there’s some debate about whether or not the U.S. has slipped into a recession, inflation is still affecting everyone. That’s why I took on the challenge of pushing myself to emphasize my needs and deprioritize my wants when spending. Over the past few months, I’ve engaged in a personal experiment to identify how and where I could cut costs in my credit card spending. After one month, I was shocked to see that I had cut my credit card bill in half. A second month went by, and my credit card bill was still half of what it typically was. I realized change was possible—and a lot easier than I thought. If you’re struggling with credit card spending, a few simple lifestyle changes can save you hundreds if not thousands of dollars, depending on your lifestyle. Here’s how I did it, along with some expert advice on how to make this method work for you.
Step 1: I deleted shopping apps from my phone.
As someone who likes to scroll through their shopping apps, having online purchasing power at my fingertips definitely made my life more convenient, but it also made me prone to making random purchases that I didn’t always need. For instance, I was prone to opening up the Express clothing app and buying a dress (or two) that caught my eye. So, I knew that if I wanted to hunker down and make serious changes, I had to get rid of these apps. I deleted most major shopping apps from my phone, leaving one or two that I used regularly (such as the Target app for curbside pickup groceries). By keeping these online stores out of my sight, I wasn’t as enticed to make any impulse buys. Simply getting rid of these apps on my phone already made me feel lighter and better. Plus, as an added bonus, it significantly reduced the amount of time I was using my phone by up to one hour a day.
Step 2: I gave myself a small allowance for wants.
Rather than going completely cold-turkey on wants, I gave myself a small allowance of $100-$150 per month for things I liked but didn’t truly need (aka buys I could probably live without, like carryout or new makeup). This helped me move forward with my experiment without feeling too restricted. Plus, I wanted to make changes in reasonable increments. In my case, this strategy helped. I still felt like I could treat myself, but in a way that kept rising inflation in mind. Levon Galstyan, certified public accountant with Oak View Law Group, says budgeting between needs and wants can be as easy as keeping a simple formula. First, make a list of everything you buy. Then, arrange these purchases into broad categories like insurance, subscriptions, food, and home supplies. Lastly, separate all categories into two buckets: needs and wants. “Add up the totals, then set your priorities,” he explains. Once you have the total number for your “wants” bucket, you can decide on a lower number that feels like a restricted but still reasonable allowance. While $100-$150 was a good choice for me, it might be more or less for you.
Step 3: I created pre-made lists for grocery shopping.
The grocery store is one of my biggest pitfalls when it comes to spending. It’s easy for me to grab snacks off the shelves that I don’t need, buy too much food, and fall victim to buy-one-get-one-free wine sales. To combat this issue, I created pre-made lists for grocery shopping that outlined exactly what we needed (and didn’t need). I also told myself that it was OK to buy one thing we didn’t need, but nothing beyond that. Within the first few trips, I realized my grocery store spending was much lower than it typically was. I was saving anywhere from $25-$75 per trip, simply by avoiding impulse buys. In addition, we were wasting way less food and actually eating everything we bought. I also tried to buy less name-brand items. For example, since I shop at Whole Foods, I opted for the store’s 365 brand when possible, which saved me money. Scott Nelson, CEO of MoneyNerd Limited—an online resource which helps people learn how to manage money—says avoiding name-brand products is a good way to cut spending. “For example, buying the store’s own version of Doritos is likely to cost half of the amount of the brand name, and quite often there aren’t many differences between the brand name and the store’s own version,” he says. “You can also sign up to the store’s ‘reward’ scheme or card, and cut coupons or collect gift cards while using those to help reduce your spending.”
Step 4: I avoided boredom-shopping.
This was the hardest step in the experiment for me. There’s nothing I love more than going to Home Goods and browsing the aisles for home decor inspiration. While I truly enjoy activities like this, they often lead less to inspiration and more to directly buying expensive purchases for my home that I don’t always need. Therefore, it was time to say goodbye to Home Goods and other stores where I was prone to boredom-shop. Instead, I tried to use my time more constructively by rearranging items in my home, which made me realize I already had everything I needed and then some. Brendan Sheehan, managing director at Waymark Wealth Management, says the best advice he ever received was learning that shopping trips are actually “social events.” “Stores like Costco, Sam’s Club, BJs, Target, and Walmart use a simple formula,” he explains. “You go into the store with a shopping list of 10 things and leave with 20 items. 10 items are necessary and 10 are impulse purchases.” The advice he received, he continues, is to cut the frequency of these visits by at least 50%. This may result in longer shopping lists with each visit, but will reduce the amount of impulse purchases.
Step 5: I resisted sales.
There’s nothing like logging onto your favorite website or walking into a store and seeing the famous “40% off” banner overhead. While sales are a great way to save money, especially on major purchases, they aren’t so helpful when the items you’re buying on sale aren’t something you need—and you end up spending money you weren’t already planning to spend. “Sleep on big financial decisions,” Nelson advises. “It’s natural to be impulsive and buy things because we want them, but do we really need them? If it’s a big purchase, sleep on the decision before buying it. A lot of the time, you’ll find you don’t end up buying it.” As part of my experiment, I avoided sales altogether, unless I knew I was going to use that purchase within the immediate future (such as buying six hand soaps for the price of three, for example, which I know we’ll go through quickly no matter what).
Step 6: I focused on what I truly needed.
To be successful in this experiment, I essentially had to create tunnel vision for myself. It was important to shift my thinking to keep my focus only on what I needed, while keeping a small cushion for pleasure buys. This included prioritizing things like pet food, home supplies, and other basics that sustain our needs and quality of life. What I didn’t need, however, were more clothes and carryout three times a week. I realized once I eliminated these things that they didn’t have much impact on my quality of life after all. At the end of the experiment, I was shocked to see how much I was saving. I was even more shocked to find out that my credit card bill was consistently cut in half. While the lessons I learned these past few months have significantly helped me navigate inflation and rising costs of living, I plan to use them moving forward in both good and bad economic times. This strategy helps me be more financially-savvy, spend money in healthier ways, and build up my savings. However, what worked for me may not work for everyone, so it’s important to tailor your spending in a way that makes sense for you.
