How to change your spending habits

There’s no expert consensus on how long it takes to make or break a habit. However, one thing’s for certain: Changing your habits, including your spending habits, is possible, but it requires some work. Examining your finances, creating a budget, setting savings goals, and starting with small changes can make it easier to form better spending habits. 

If you’re grappling with how to change your spending habits, following these manageable steps and remaining consistent can help you improve your situation.  

How do spending habits form? 

While everyone is different, multiple sources probably helped you form your spending habits. Here are some of the most common influences: 

• Family influence: According to the Consumer Financial Protection Bureau (CFPB), our attitudes and values toward money start to form in early childhood. Thus, our family’s financial habits often influence your own. For instance, if your parents were frugal growing up, you might be more likely to prioritize saving.^[1]   

• Media influence: The media you consume also influences your spending habits, from the characters you related to on television as a child to the news you read and ads you view as an adult.^[1]   

• Individual influence: Your own personality, goals, and how you perceive your past experiences around money also influence your spending habits.^[1]   

7 Steps to stop spending money and improve your spending habits 

Changing your spending habits won’t happen overnight, but with time and effort, you can improve your spending habits. These steps can help you along the way.  

1. Examine your finances 

The first step to shifting your spending habits is understanding where your money is going. Examining a few months’ worth of bank and credit card statements and your monthly financial obligations can help you identify spending patterns and the categories where you’re spending the most. You could do this audit manually or use a budgeting app that syncs up with your accounts to simplify the process.^[2]  

Reviewing your current debts and their interest rates is also important. If you have a few thousand dollars in high-rate credit card debt, for instance, you might benefit from consolidating it with a lower-rate personal loan or a balance transfer credit card with a 0% introductory APR.  

2. Prioritize your spending 

Once you understand where your money is going, prioritizing your spending is your next step. Your monthly debt obligations and essential expenses should come first, followed by what’s most important to you. For example, if your family bonds over take out a couple of times a month, you might put that cost high on your priorities list.  

Prioritizing your spending can help you understand which expenses are essential, important, and not-so-important, so you can allocate your money accordingly. However, you don’t have to make sweeping changes, like cutting out non essential spending, since that may be overwhelming.^[2] 

3. Make small, incremental changes 

Changing your spending habits starts with small, incremental changes rather than a sweeping overhaul. For instance, instead of completely cutting non essential spending, you could look at your low-priority expenses and decide to reduce your monthly spending by $15 in a couple of categories. That might mean sacrificing one weekly trip to your favorite lunch spot or trading a few brand names for generic items at the supermarket.^[3]  

Small, incremental changes can be less overwhelming and easier to stick with, increasing the likelihood that your new behaviors will become habits.  

4. Set savings goals and track progress 

Want to grow your emergency fund? Save for a home down payment? Stop living paycheck to paycheck? Taking a more organized approach toward your savings goals could help you achieve them faster. You can set and track your progress on your own, but it’s often easier to rely on a budgeting app. Many apps let you set savings goals, allocate money toward them, and easily view your progress.^[2]  

5. Make saving automatic 

Consider saving money automatically, either by regularly allocating a portion of your paycheck to your savings account or scheduling routine transfers. When you save automatically, it becomes part of your routine. Even if you’re only saving a small amount, it will eventually add up. Also consider increasing the amount you save as your spending habits start to shift, or after you experience a windfall, such as a raise or bonus at work.^[3]   

6. Start meal planning 

According to a U.S. Bureau of Labor Statistics Consumer Expenditures report, U.S. adults spent an average of $9,985 on food in 2023. Grocery spending accounted for nearly two-thirds of this cost. Fortunately, it’s possible to reduce your spending by meal planning each week and sticking to a grocery list. Both strategies can help you avoid impulse buying, saving you money on food.

Bonus: Meal planning can also help save you time at home and reduce food waste.^[3]  

7. Create a budget and stick to it 

Creating a budget can help you stay on track toward better spending habits. Your budget can be as simple or detailed as you’d like. For instance, some people prefer to categorize their spending in a detailed spreadsheet, while others find it simpler to use a budgeting app. You can also use a more high-level budgeting strategy, such as the 50/30/20 budget.^[2]   

This method allocates 50% of your monthly income toward essential expenses, 30% toward nonessential expenses, and 20% to savings or debt payments. Choosing a budgeting tool and strategy that aligns with your needs can increase the likelihood that you’ll stick to your budget in the long term.^[2]  

The bottom line 

Your family, the media, and your personality shape your views about money. These are strong influences, so changing your spending habits can seem complicated. However, building a strong financial foundation isn’t as difficult as you think, and the steps outlined above can help you figure out how to create better spending habits.^[1] 

Start by auditing your finances to understand your spending and debt obligations. You might find you could save on interest by consolidating high-interest debt with a lower-rate personal loan. Doing so might give you some wiggle room as you work toward improving the ways you spend.   

1. Consumer Financial Protection Bureau. “Financial well-being: The goal of financial education.” 

2. Consumer Financial Protection Bureau. “Budgeting: How to create a budget and stick with it.” 

3. Consumer Financial Protection Bureau. “Two ways to save extra money.”