A 28-year-old woman with a six-figure net worth has spilled details on how she took control of her personal finances to avoid bad spending habits.
Michela Allocca, from the US, dished out the seven simple things she stopped doing when she decided to be smarter with her money.
“This might sound crazy but I don’t shop sales,” she said.
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“It doesn’t mean that I don’t buy things that I need when they’re on sale but just because a store I like is having a sale, doesn’t mean that I am going to use that as an excuse to go buy a bunch of things.
“Sales are designed to create FOMO (fear of missing out), they’re designed to prompt you to purchase.
“So if there’s something that you didn’t already need that you buy at 50 per cent off, you’re not saving 50 per cent, you’re spending 50 per cent on something you wouldn’t have purchased in the first place.”
Michela Allocca has spilled details on how she took control of her personal finances to avoid bad spending habits. Credit: Michela Allocca
Never impulse buy
Michela — who ditched her 9-5 finance job to pursue her business Break Your Budget full time — said she never makes impulse purchases.
“Any time I feel the urge to go make a purchase, I add it to a list on my phone,” she said.
“I have a list on my phone of a bunch of things I’ve been wanting for a while so if I need something or I’m ready to make a purchase I can go back and reference that list.”
She said the list “forces” her to create a space between an “immediate urge” and a “desire to buy something”.
“I feel like we, as a culture, are very uncomfortable denying ourselves what we all like to call ‘little treats’ but everything can’t be a little treat,” she said.
“So learn to create distance between an immediate desire, start creating a list on your phone and if you still want to make the purchase four or five days later, then consider it.
“But at that point you’re probably going to have forgotten about it.”
The author of Own Your Money said she stopped spending money on things she didn’t care about.
“I’m super cut-throat when it comes to what I will and will not spend my money on. I’ve gotten really clear on my spending priorities in the things that add value to my life,” she said.
“If it doesn’t add value to my life or it isn’t a necessity, I’m not buying it.
“I know that sounds kind of strict but at the end of the day money is a tool to either improve your life or make your life a lot harder so take some time and go back and look through what you are actually spending your money on.
“Ask yourself, ‘Are the things I’m spending my money on like non-essential spending making my life better or am I spending money on things that I don’t care about that’s ultimately just going to make my life harder?’”
She dished out the seven simple things she stopped doing when she decided to be smarter with her money. Credit: Michela Allocca
Return unwanted items
She always finds time to return unwanted items.
“If I buy some clothes and I don’t absolutely love the way they look on me or I feel like I need to style them a certain way in order to wear it, I will return it,” she said.
“That means I will take a trip to the Post Office or I will go back to the store even if it’s inconvenient and I will send it back because if you don’t return things, you’re spending your money on things you don’t care about.”
Say ‘no’ to going out
Michela said she politely declines invitations to go out with friends if it’s going to cost her money.
“I no longer agree to plans that I don’t want to go to or don’t want to participate in,” she explained.
“This could be a factor of me being in my late 20s but I also just think it has to do with the fact that literally everything, not only cost money, but is so expensive now.
“So no, I don’t want to go out to dinner on Friday or Saturday night and spend $80 on dinner and drinks, I’d rather stay home. If your friends give you a hard time about it, then you need new friends.”
Don’t window shop or browse online
Michaela said she never wastes her free time on window shopping or browsing online retailer stores.
“I used to be the kind of person who if I had a Sunday afternoon, you bet I was going to walk the aisles of Target or spend my afternoon online shopping or scrolling on social media,” she said.
“Instead I now use my time for my hobbies like hiking, walking, Pilates, hang out with my friends or I will cook something, you have to find other ways to fill your time.
“If you find your hobbies have become shopping, go get a different hobby.”
Stop emotional spending
Finally, she avoids emotional spending.
“Any time I get the urge to spend money on something I didn’t already plan to buy, I will write it down on the list in my Notes app on my phone,” she said.
“If you’re feeling emotional, it’s obviously really easy and pretty straight forward to go buy something or treat yourself to something and use how you feel as an excuse.
“There are situations obviously where this is occasionally okay but it can’t be something that becomes a habit. Give it 24 hours, let the emotion pass and then if you still want the thing, consider buying it or add to your list.”
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