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10 Ways to Keep Your Spending in Check This Year

By Catherine Brock - Jan 9, 2022 at 8:00AM
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10 Ways to Keep Your Spending in Check This Year

A wealthier 2022

Learning to keep your spending in check pays big dividends. When you know how to spend less, you can set and realize financial goals, adjust when unexpected expenses arise, and control the amount of debt you carry. Essentially, you are in full command of your finances.

Make 2022 the year you make big strides toward a wealthy future. Here are 10 ways to keep your spending in check this year.

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1. Save before you spend

An easy way to reduce spending is to save first. Set up automatic transfers to move money from your checking to your savings account on the days your paycheck is deposited. Or, even better, move the money to a restricted retirement account -- either a 401(k) or IRA.

This strategy works best if you don't resort to credit cards when the money's not available in your checking account. If you're worried about that, destroy all your credit cards but one. Earmark that remaining card for emergencies only. You might even ask a trustworthy friend to hold it for you.

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2. Schedule spending freezes

A spending freeze is a period of time in which you make no discretionary purchases. Think of it as a juice cleanse for your finances. You can pay your rent and your utility bills, but you cannot eat out, go shopping, or have a spa day.

You can implement a spending freeze for as long as you want. If you've never done it before, start small -- say, with a weekend of no spending each month.

You want that first spending freeze experience to be positive and empowering. Ideally, you'll learn more about why you spend. You'll also practice redirecting the shopping impulse into other activities.

ALSO READ: 20 Ways to Cut Spending

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3. Reprice recurring services

You can realize huge reductions in your annual spending by lowering the cost of recurring services. These include streaming services, cell phone plans, car insurance, homeowners insurance, salon visits, and any random subscriptions you have.

Start by making a list of your recurring and negotiable expenses, then work through those items one by one. For each, consider whether it makes sense to shop for a lower price, reduce the frequency of the charge, or cancel the service altogether.

For example, you can shop around for lower insurance premiums and extend the time between haircuts by one week. You might also cancel a streaming service, or two, outright. With actions like those, your cumulative annual savings could be significant.

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4. Try a waiting period

A waiting period on discretionary purchases can save you a bunch, too. Here's how this works. You set a dollar limit and a time frame, such as $100 and 72 hours. Going forward, for any optional purchase over $100, you must wait 72 hours before you complete the transaction.

The waiting period helps you differentiate between purchases you really need and those you don't. Often, a day or so into the waiting period, the emotional urge to buy fades. At that point, you can evaluate more objectively if you should proceed with the purchase.

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Four people eating lunch at a restaurant.

5. Rethink your lunch

Lunch can be a hidden budget-buster. There isn't a lot of current data on the cost of lunch, but Visa did do a study in 2015. The conclusion then was that Americans spend an average of $2,746 annually on lunch.

If you're eating out multiple days during the week, reworking your lunch plans could save you hundreds this year. Try making your own lunch. Or replace a sports bar burger with a sub sandwich you can buy with a coupon. If you must eat out, choose a venue where you will earn cash back or discounts on future meals.

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6. Shop year-round for the holidays

Take the time constraints out of holiday shopping and you're likely to spend less.

Try making your holiday gift list now, rather than waiting until next fall. This takes some early organization, but there are clear benefits. You can spread your spending across 12 months, which is easier on your budget. You can take your time with gift decisions, which minimizes those last-minute, desperation buys. You can also shop for some gifts out of season (like sweaters in the summer), which can provide steeper savings than holiday sales.

ALSO READ: 15 Ways to Cut Spending and Save More for Retirement

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7. Buy one, sell one

The strategy of "buy one, sell one" helps you manage what you spend on clothes and shoes. This involves selling a piece of clothing for every new one you buy.

The goal is to add consequence to your buying decisions. Selling used clothes will raise a little cash, but more importantly, it takes time and effort. That work required should encourage you to evaluate new purchases with more rigor. If you're committed to the process, you'll start asking questions like, "Do I want this shirt badly enough to sell something that's already in my closet?"

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8. Shop used

While you're learning the ropes of selling used clothes and shoes, try buying that way, too. You can save thousands by purchasing pre-owned goods -- not only clothes and shoes, but also electronics, exercise equipment, tools, hobby equipment, furniture, and even gift cards.

For larger items, shop local via Meta Platforms' Facebook Marketplace and apps like OfferUp and 5miles. You can find deals on smaller, shippable items on Mercari and eBay. There are also sites and apps dedicated to one type of product, like eCampus for college textbooks and Chairish for furniture.

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9. Subscribe to save

For items you use regularly, consider subscribing to regular shipments for lower per-unit prices. Products suitable for subscriptions include vitamins and supplements, coffee and tea, toilet paper, pet medications, diapers, and pantry staples.

Amazon has many subscription options, with up to 15% savings when you receive five or more products in a monthly shipment.

The trick, though, is understanding how much product you use in each time frame. Get it wrong and you end up with too much stuff or not enough. Try tracking your consumption first before you set up any automatic deliveries. That'll help you get the timing right from the start.

ALSO READ: 4 Fun Savings Challenges for the New Year

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10. Optimize your cash back

Another savings strategy involves layering cash back rebates on your purchases. For example, you can start with a cash back credit card that offers 2% back on every dollar you spend. Use that card to buy used gift cards at a discount. Choose store gift cards with rich loyalty programs to earn even more. You could also layer in rebates from browser apps like Rakuten, Honey, or Coupert.

This strategy works best when you can resist the urge to chase cash back rewards. It's not productive to earn rebates on purchases you didn't need to make, after all. Use spending freezes and waiting periods to practice discipline with your purchase decisions.

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Presented by Motley Fool Stock Advisor
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Two people smile at each other while reviewing paperwork in front of laptop.

Spend less now, have more later

Start the new year off right with a renewed commitment to spend less. You can realize major savings by tackling your spending from two angles. Start by improving your spending discipline -- we can all get better at saying no to things we don't need. Saving first, then utilizing spending freezes, waiting periods, and selling before you buy will help.

The next step is to lower the cost of things you do buy. Cost-cutting strategies include repricing your recurring services, shopping used, subscribing to essentials, and earning cash back.

Finally, remember that the money you don't spend now will fund better things in the future -- like paying down debt, covering college costs for you or your kids, funding a new home purchase, or helping to provide a comfortable retirement.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Catherine Brock has no position in any of the stocks mentioned. The Motley Fool owns and recommends Amazon, Meta Platforms, Inc., and Visa. The Motley Fool recommends eBay and recommends the following options: long January 2022 $1,920 calls on Amazon, short January 2022 $1,940 calls on Amazon, and short January 2022 $82.50 calls on eBay. The Motley Fool has a disclosure policy.

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