Your spending style determines if you'll be in debt. Right spending style will help you save money and avoid credit crunch in 2014. It will help you achieve your financial dreams and aspirations. On the other hand, wrong spending style will just pave the path to bankruptcy.

Read along to know about the 5 spending styles that will help you avoid and pay off your debts in 2014. Choose the one that suits your financial needs.

5 Spending styles – Choose the one that suits you the best

Nysa Williams works as a teacher in Florida. She follows cash-only spender style to save money and stay away from debts. Nysa buys only when she has money in her hand. No matter how much she is tempted to buy a certain product, she would never place an order if there is no money. This spending style has suited her well, but this doesn't mean that it will suit you too. This is only one spending style. There are several other spending styles as well. Get an idea about them before choosing a particular style.

  1. Needs-only spender: When you spend only on the necessary items and deprive yourself of all the luxuries in life, then you're basically a needs-only spender. In this spending style, you focus on your needs rather than your wants. Create a list of your needs and wants. Spend your hard earned money on the items that are there on your 'needs' list. For instance, credit card bills, rent, insurance, etc. If there is any item on your 'wants' list, then avoid spending a penny on that thing. This spending style is best suited for the people who are in debt. It helps them to eradicate debts fast. You stop spending money on the discretionary items and follow a strict cash diet. This helps to save money and accelerate the debt repayment process.
  2. The envelop queen spender: This is a traditional spending style wherein you visit ATM once or twice a month and withdraw money. You take a few labeled envelopes (for gifts, clothes, groceries, rent, etc) and keep the cash inside them. For instance, if your budget for gifts is $400, then keep that amount in an envelop labeled as “gifts”. This spending style may seem to be outdated, specially at a time when several people prefer to stick to electrical banking. However, according to a recent survey, almost 40% of the citizens follows this style.
  3. No-sweat spender: In this spending style, you prefer to shop with credit cards after fulfilling all other financial obligations. If you're planning to purchase a new computer or television, then all you need to do is check out your savings account once and make a decision. If you want to adopt this spending style, then try to build a financial cushion first. Create an automatic savings account and pay your bills regularly. Once you've taken care of your main financial responsibilities such as bill payments and retirement contributions, you can start buying several things with credit cards.
  4. E-spender: Do you love shopping online? If yes, then you fall into the category of E-spender. Mary, a single mother and an event organizer, doesn't have time to visit stores. She prefers shopping online because of her busy schedule. Mary knows the value of money. As such, she always looks out for discounts and free shipping offers. This helps her to save money. In addition to that, she buys groceries in bulk so that she qualifies for even more discounts. This spending style is best for the people who don't have enough time for money management. This style is quite good for the overwhelmed parents, who prefer to buy anything and everything online.
  5. Rewards-happy spender: This style is specially for the ones who love to spend with reward cards to get some extra points. You can get some lucrative rewards such as cash back and travel miles after you rack up sufficient points. This style is not suitable for everyone. If you've no debts and your credit score is good, then this style is suitable for you. Keep a tab on your expenses so that you don't overspend just to get some extra points.

Final Word

Right spending style can help you save consistently and steer clear of debt problems. You can build a strong financial house and live happily ever after.

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