You didn’t shop online. You didn’t go on a big vacation. But somehow, your account balance looks like it’s taken a hit. What gives?
One of the most overlooked ways people lose progress on their financial goals is passive spending. Passive spending is dangerous because it deals in small purchases. $5 here and there can add up over time — and jeopardize your savings goals.
But you’re in control of your wallet, and learning when to spot passive spending habits can help you nip problems in the bud — and put more money towards your goals.
What Passive Spending Looks Like
Passive spending isn’t always about things you forgot to cancel — it can be money you spend out of habit, boredom, convenience or emotional dysregulation.
Think of all the app store purchases, takeout orders, impulse buys during grocery shopping and the seamlessness of one-click purchases. It’s easy to lose track of what you’re spending and where, especially for the little things.
Spot the Signs
Instead of tracking every dollar, take 10 minutes and scan your last 30 days of bank and credit card transactions. Anything you don’t remember buying, charges that happened more than twice for the same category (like food delivery or coffee shops) and sub-$25 purchases that felt “harmless” at the time are your main targets. List out the purchases you wouldn’t make again, and note if these have anything in common.
Hit Pause
Based on your evaluation, draft up some rules for yourself. Find yourself shopping on Instagram after dinner? Make a rule about no same-day purchases after 7 p.m. Get overzealous about grocery shopping? Use what you already have, and stick to a basic list. These small commitments money disappears.are speed bumps for spending — make an effort to follow your own rules.
Watch Your Progress (and Celebrate It)
Every $10 you keep is $10 that can go toward getting out of debt faster. Keep a note on your phone or a sticky note on your desk where you can see your total grow.
When you hit your first $100 in skipped passive spending, celebrate it. Not with more spending – but with a moment to appreciate the progress you’re making.
Your Money is a Part of Your Emotional Life
Don’t ignore the emotional element of buying. Sometimes, our highs and lows are the root of our bad financial habits — and it’s worth taking time to reflect on when and how you spend.
For many, spending money on little things can be a form of control. Understanding your habits in the context of your emotional life can pay major dividends. By recognizing when you want to spend and why, you give yourself the real control that spending never could.