Want to Waste Less Money? Start With These 4 Good Money Habits

Survey says... spend less, save more.

Survey says... spend less, save more.

If you've ever checked your bank statement and felt shocked by your own spending habits, you're not alone. Most Americans waste money now and then, and most want to learn how they can stop.

The Ascent's recent study on wasteful spending habits illuminates the most common ways in which people waste money. The survey asked participants about their financial habits, and their answers were used to create a list of the good financial habits of people who wasted less money.

Here are the top four tips based on these findings.

1. Pay all bills on time

It sounds simple enough, but in practice, it can be easy to miss a due date or overspend and come up short at the end of the month. While 41% of more-wasteful participants reported failing to pay their bills on time, only 14% of less-wasteful participants reported the same.

Like most good financial habits, this one is cyclical. Waste less money and you'll have more money to put toward your bills. At the same time, if you pay your bills on time, you won't waste money on late fees and interest fees. Considering survey respondents found unnecessary fees and excessive interest to be the biggest waste of money, it's worth drilling this habit into your brain.

If you often forget to pay your bills on time, set up reminders for yourself and use autopay when it's available. Some credit cards even let you select your own payment due date -- if you can line it up with the rest of your bills, it's easier to remember. Folks paying off multiple balances with different due dates might want to consider a debt consolidation loan.

Finally, if you routinely don't have enough money to pay your bills on time, some of the strategies below should be helpful.

2. Limit your debt

If you want to avoid wasting money, racking up a large bill on a credit card with a 17% interest rate isn't the way to do it. Roughly seven in 10 respondents who waste less reported limiting their debt, while only 37% who waste more reported doing so.

Pay your credit card bill in full every month, and if you need to borrow money, consider a low-interest personal loan or a 0% intro APR promotional offer -- just make sure to pay off the balance before the promotional period ends. If you already have credit card debt, look into balance transfer credit cards that can help you pay off that debt quickly thanks to their limited-time low interest rates.

The idea is to limit your debt, not avoid debt altogether. If a particular offer has a low interest rate and helps you own an asset that will bring future returns, debt isn't always a bad idea. That's why mortgages and small business loans can be very beneficial.

However, you never want your monthly debt obligations to grow beyond what you can afford.  According to Wells Fargo, a good debt-to-income ratio is 35% or less. You can calculate this number by adding up your monthly bills, such as your credit card payment, auto bill, rent or mortgage, loan payments, alimony, and other debts, and then divide that number by your gross monthly income.

3. Start saving

This one can be hard when you feel like all your money goes toward bills, but it's critical. Roughly seven in 10 less-wasteful respondents reported saving money, while less than three in 10 more-wasteful respondents could say the same.

You can start building good saving habits with very little money. Whether you're able to put away $25 or $100 each month, the act alone will get you used to stashing away part of your income. Then, when you have more disposable income, you can increase your savings rate instead of having to start a new habit from scratch.

A great way to start saving is to open a free online savings account and set up automatic monthly deposits. That way, you'll be transferring money into your savings account without even thinking about it.

Even better, if you have direct deposit set up with your employer, they may allow you to split your paycheck into two accounts, letting you deposit a percentage of your paycheck directly into your savings account each month. Aim for a savings rate of 20% of your income. If you're not there yet, that's okay -- but make it your goal.

4. Track your spending

If you struggle with paying bills on time, limiting debt, and saving, make a budget and track your spending. Sixty-five percent of less-wasteful respondents regularly tracked their spending, compared to 36% of more-wasteful respondents.

You've got two options here: manual and automatic. Plenty of apps automate the process of creating a budget and tracking your spending, and these are helpful for people who can't commit to tracking each expense on their own. Set a spending limit for categories such as eating out, travel, and shopping, and some apps will even send you a notification when you're bumping up against that limit.

If you want to stay hyper-conscious of your spending habits and have a more accurate picture of your monthly budget, track spending manually. You can use an Excel spreadsheet or go old school with a pen and paper to log and categorize your daily expenses. 

After your first month, go through your monthly spending and find areas where you could cut back. Did you spend more than expected on fast food? Set a spending limit for the following month and adjust your eating habits accordingly.

Long-term habit adjustment isn't easy, but these four steps are simple actions you can take to move toward spending less and saving more.