"I Need This!" – This Will Empty Your Bank Account

This is what gets us into trouble. Too often we confuse what we need with what we want and before long, we have copious amounts of stuff and no money.

Before spending money on things you don't need, figure out what your necessities are. These are usually groceries, gas, clothing, electricity, Internet, etc... You see where I'm going with this. If you have a perfectly good pair of winter boots, you don't need another pair. You don't need that chocolate bar. You don't need a brand new car when the one you currently drive is only a few years old and still in good condition. You don't need that new Hello Kitty doll to add to your already massive collection.

Stores are designed to tempt you to make frivolous purchases and spend more than you intended. Here are a few ways they do this:

• Sales and limited-time only offers. This is a given. Customers are more likely to make an impulse purchase due to the sense of urgency to buy. People also like thinking they got a good deal. However, if you paid $60 for a $90 item you weren't planning to purchase, you didn't save $30. You spent $60.
• Music. Studies have shown that slower music keeps customers in the store longer, which usually leads to more spending. Playing classical music encourages customers to make more expensive purchases.
• Checkout. How many times have you been in the checkout line and threw in a couple of items? It happens to the best of us. But stores bet on those sales because they know most people can't resist.
• Customer loyalty cards. Stores use these to collect and track customers' purchase data to offer you points or deals based on your spending habits. Therefore, helping you spend more money.

So how do you combat this? First, get on a budget. Decide on an amount based on your spending habits and stick to that number! Second, write a list. If an item isn't on your list, you don't purchase it! Third, check the paper for sales so you'll know ahead of time what to expect. If there is something that you need that's on sale, add it to the list. If not, keep it moving. 

When in doubt, always question your motives. Don't ask yourself, "Is this something I need?" because we often talk ourselves into believing that we do. Instead ask, "Is this on the list?" "Is this in the budget?" "Is this going to help me better myself financially? 

It can be tough, but once you get into the habit, you'll realize that all of your stuff isn't all that important. Focus on the needs and treat yourself (within the budget) to what you want when you've earned it.