5 Spending Habits You Need to Break TODAY

Summary

In this episode of The Rachel Cruze Show, Rachel discusses five bad spending habits that can hinder financial progress, particularly for those in Baby Steps 1-3 of Dave Ramsey’s plan. She highlights the impact of convenience spending, impulse buying, lack of planning, not tracking expenses, and emotional spending. Rachel emphasizes that avoiding these habits and sticking to a budget will help achieve financial stability faster. She encourages viewers to get control over their money, build an emergency fund, and ultimately create a life they love, free from debt and financial stress.

Takeaways

• 😀 Spending habits have a major impact on financial success. It's important to analyze whether your habits are helping or hindering your financial goals.
• 😀 If you're on Baby Steps 1 through 3 (getting out of debt, building an emergency fund), focus on minimizing spending to speed up progress.
• 😀 Convenience spending, such as delivery services or valet parking, might seem easier but can lead to unnecessary costs that hinder your financial goals.
• 😀 The average American spends $67 per week on delivery services, which adds up significantly over time. Avoid these extra costs during the early baby steps.
• 😀 Impulse buying can be a major drain on finances. The average American spends over $2,100 annually on impulse purchases, which could be better invested.
• 😀 A lack of planning in spending often leads to financial mistakes. Budgeting is key to managing money effectively and feeling more in control.
• 😀 Using a budgeting tool, like EveryDollar, can help you track your spending and ensure that your money is going toward the things that matter most.
• 😀 Tracking expenses is essential for managing your finances. Whether by hand or with an app, knowing where your money goes is crucial to staying on track.
• 😀 Spending to feel better (retail therapy) is a common emotional response but doesn’t contribute to long-term happiness or financial health.
• 😀 Small changes in spending habits, such as cutting out conveniences or impulse buys, can free up significant funds and help achieve financial goals faster.

Q & A

What is the main focus of Rachel Cruze's episode?

Rachel Cruze discusses common spending habits that may be hindering financial success, especially for those in the early stages of Dave Ramsey's financial plan. She offers actionable advice on how to identify and correct these habits.

What is the risk of spending on convenience, according to Rachel Cruze?

Spending on convenience, such as using delivery services or valet parking, often leads to higher costs due to extra fees, tips, and subscriptions. This reduces the money available to pay off debt or build an emergency fund.

How much does the average American spend on delivery services each week?

The average American spends $67 per week on delivery services, which adds up to significant costs over time, especially if you're in the early baby steps of financial planning.

What are the potential consequences of impulse buying?

Impulse buying leads to spending money on unplanned purchases. Over time, this can total over $2,100 a year. If that money were invested instead, it could grow substantially by retirement.

What solution does Rachel Cruze suggest to avoid impulse buying?

Rachel advises planning purchases and avoiding making decisions based solely on the urge to buy something. She suggests resisting the momentary satisfaction of buying and instead saving or investing that money.

What is the importance of budgeting, according to Rachel Cruze?

Budgeting is crucial because it helps you allocate every dollar purposefully, preventing wasteful spending. Without a plan, people often waste money without realizing it, which can delay or derail financial progress.

How does Rachel Cruze recommend tracking expenses?

Rachel recommends using tools like the 'EveryDollar' app to easily track expenses. The app connects to your bank account, categorizes transactions, and helps you stay on top of your budget.

Why is tracking expenses important for financial success?

Tracking expenses ensures that you are aware of where every dollar is going, which helps maintain control over your finances and ensures you're sticking to your budget and financial goals.

What is 'retail therapy,' and why should it be avoided?

Retail therapy is the act of spending money to feel better emotionally, often as a response to stress. Although it provides a temporary dopamine rush, it leads to buying things that aren't necessary and can derail financial goals.

What strategy does Rachel Cruze use to resist unnecessary purchases?

Rachel shares that she adds items to her shopping cart but then avoids completing the purchase. This allows her to get the emotional rush without spending money on things she doesn’t need.