10 No-Brainer Ways to Improve Your Spending Habits

Practice smart shopping this Christmas: An easy 10-step guide to spending wisely this holiday season.


There's no doubt about it, holiday sales are  in full swing. With only a few weeks to Christmas, it's hard not to get carried away with the mad dash to shop to your heart's content. Before you arm yourself with your reliable credit card, we suggest you pause and read this first. Here are 10 tips that could save you from welcoming the New Year in a pool of debt:

1. Be self-loving. Pay yourself first.

After 15 days of slaving at the office, you definitely earn a reward. Think of savings as part of your monthly bills. You worked hard, so make sure you get paid for it. Generally, the formula that most of us living on a budget use is "income - expenses = savings".  But this is wrong. That’s the reason why we find ourselves broke a week after our payday. Go by this formula instead: Income - savings = expenses. Yes, pay yourself first before your credit card bills.




2. Be frugal. Live within your means.

Some people tend to live like a millionaire for one day. If you’re one to practice this awful habit - stop it! Yes, it's the holidays, and it's only once a year. But remember that your credit card doesn't mean you can suddenly afford something that's twice the price of what you earn. Your credit limit is not extra cash, but actually the amount of money that the bank is willing to lend you. Your credit card is not an extension of your wallet. Some people tend to forget that using it is equivalent to borrowing money from someone. So be realistic and buy only things that you can afford.


3. Be prudent. Do not max out your card.

Living on the edge is not wise. Just like standing on the precipice of a cliff,  maxing out your credit card is an absolute no-no. Being on the edge of your credit card limit gives you little space to move and it's almost inevitable to find yourself paying over-limit fees. If possible, stay within 30% of your credit limit. Think of the rest as fund for emergencies like medical expenses.

4. Be resourceful. Treat your credit card as a last resort.

Before buying that pretty new gadget you've been lusting for, ask yourself these questions: Do you have the cash for it? Do you need it now? Can you pay in cash? Remember to shop as carefully with a credit card as you do with cash.  As a hardworking individual, you deserve to pamper or reward yourself every now and then. But remember to pay cash as much as you can. A better advise is to save up for that gadget instead of swiping your credit card. Use your card only when you have no other means to pay.



5. Be your own accountant. Control your cash flow.

Be on top of your own finances. When you have extra cash, like your 13th month pay or Christmas bonus, pay more than the minimum amount due. Remember that the longer you have an outstanding balance,  the more interest charges you end up paying. If you can afford it, pay off your credit card bill fully before the due date and you avoid getting charged the interest fines. If you achieve this habit, you’ll realize that it's like borrowing money without having to pay other fees!



6. Be an obsessive compulsive. Track your purchases.

To prevent busting your budget every month, keep a list of the purchases you make. Some people even keep a ledger (or an excel file, if it works for you!) and review their receipts so that you are aware if you're still within the limit or budget. Aside from awareness, you will also be able to catch erroneous charges the moment you see your credit card statement. Banks allow you to contest the charges on your bill for a limited time so it helps if you're fully aware of your credit card transactions. Do not hesitate to report any wrong charges on your card, and do it soon.


7. Be punctual. Always pay on time.

Credit card payments are one of the worst possible things you can be late for. The late fee charges seem trivial but, when you look closer, you'll realize how much your tardiness is really worth. Make sure you also anticipate weekends and holidays when making payments to avoid late charges. Missing a credit card payment begins with a late charge that could snowball into disastrous arguments over the phone and going through hoops of fire just to get everything back into place. So to avoid the unnecessary stress, take note of your cut-off dates and due date. Better yet, create a monthly alarm on your phone.


8. Be your own financial manager. Get the low-down on your credit card’s  interest rate computations.

As boring as it may sound, learning how your bank computes interest rates is very important. Surprisingly, most credit card owners are not aware about the standard practices in the credit card industry. For example, not many people know that when you have unpaid balances, regardless of the amount, current purchases that are not yet due for payment earn interest, too. So make sure you brush up on your banking skills. It's better to know what  and how much you are up against, rather than finding yourself looking at your bill and wondering how the heck you racked up those charges.

9. Be a know-it-all. Know all your benefits as a credit card holder.

Most people are not aware of how credit cards come with rewards and exclusive privileges. On top of exclusive discounts from merchant partners, you also accumulate rewards points every time you use your credit card. You can use your rewards balance to purchase items or even pay for your annual fee.  Some credit card companies even offer cash back credits! So make sure that you take the time to visit your credit company's website to read about rewards and promotions so you can get the most value from your card. You never know, that cool little gadget might be something you can get with just your reward points!


10. Be cautious. Keep your credit card safe.

Credit card fraud is so prevalent especially this season. So never let your credit card out of your sight. You should never surrender your card to anyone, even if it's due for replacement.  Don't expose your account details and immediately report a lost or stolen card. You can never be too careful or too paranoid when it comes to credit card fraud.  So avoid being a victim and heed Mad-Eye Moody’s advise: constant vigilance!


Keeping your head above water this mad season is not that difficult. You don’t have to go all Becky Bloomwood  and cut up your credit cards. Follow these no-fail tips and you’ll be fine. To be safe, if you’re not planning on making important purchases, just leave your credit card at home. Remember, out of sight - out of mind.

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