How to go on a spending diet

If you're finding it hard to stay within budget month after month or have already spent much more than planned this holiday season, now is a great time to clean up your spending habits. Scaling back your spending may be just what you need to reduce some of that financial stress in your life and get a better handle on your finances. Being more mindful of each expenditure and setting budget goals are necessary first steps.

Use these tips to put yourself on a spending diet this season:

1. Don't look at it as a diet. Just like dieting to lose weight, your efforts can backfire if you're feeling deprived, or if you feel as though you're missing out on something. Change your money mindset so that you start to see how staying within a budget and cutting out extra expenses is a positive step toward your goal of saving more, paying down debt and having the peace of mind that your finances are not out of control. The more you associate scaling back as a positive, the easier it will be to stick with your diet.

2. Assess the damage. This may be the biggest reason you haven't been able to stick with your budget so far – you just don't want to look at how bad the problem is. But knowing what you're working with can help you get a better handle on how to curb your spending going forward.

When evaluating your budget, make a list of your monthly recurring expenses, and see how much you actually have available to spend on entertainment, shopping and other purchases each month. If you are consistently spending more than this amount, you will find it impossible to save money and stay within your budget. Figure out exactly how much you have available after all expenses have been paid and you have contributed to savings, so you have an accurate idea of your spending limits.

3. Monitor your spending. Keep track of your spending habits for at least a week by writing down everything you purchase. Then figure out how many of those purchases were planned or spontaneous. This can make you more aware of how much you spend on a day-to-day basis and how well you can stick to a spending plan. You can use apps like Mint or Spending Tracker to track your spending on a mobile device and review everything at the end of the week.

4. Identify your triggers. Do you tend to spend more when you're feeling sad, lonely, upset or stressed? You may be an emotional spender, which can make it difficult to stay within a budget. Explore alternative ways to deal with negative emotions so you don't spend away your savings, or worse, go into debt. Finding ways to take care of yourself – without retail therapy – could help you manage your money better and help you reach your financial goals faster.

5. Cut out the nonessentials. How many subscriptions do you pay for each month that don't get fully used? How much do your daily coffee runs, happy hours, last-minute food pickups or spontaneous purchases end up costing you per week? If you can cut out just a few of these extras each week, you could end up saving up to $25 or more – or at least $100 per month – without even realizing it. Make a list of extras you can't live without, and give yourself a weekly allowance specifically for those purchases. This way, you can still enjoy some indulgences but will stay within your budget.

6. Say goodbye to credit cards. If you have a habit of deferred spending – buying on credit in hopes of paying off the balance later – make a conscious effort to break the cycle so that you only spend money that you actually have.

It's all too easy to fall into the trap of thinking that available credit is cash available for you to use at your leisure, but spending on credit does come at a price. Even if you commit to paying off the balance in full at the end of the month, consider how many spending decisions you will still make between now and then. Spending with a credit card can give you the false security that you have more money than you actually do – which can easily pull you into debt or leave you struggling to keep up with your bills at the end of the month. Quit the credit card habit so you can become a more conscientious spender with cash you have in the here and now.

Follow these spending diet tips, and you'll have a healthier bank account.

Copyright 2015 U.S. News & World Report

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