Lesson 3 - Decrease Spending

Objective: Reduce spending to at least two expenses/areas of spending.

Many theories of behavior change believe that there are five stages to making any meaningful change. The first is pre-contemplation, where you haven’t even considered making a change. The next is contemplation, where you start to think about the possibility of making a change, followed by preparation, where you earnestly begin planning for making that change. Hopefully the previous two lessons helped to guide you through those first three steps as they relate to reducing spending; now it’s time for step four – action! At this point, you should have already identified a number of spending leaks, looked at possible ways to cut back on spending, and have at least two strategies to reduce regular spending and/or plug spending leaks. Now it’s time to work towards implementing those changes. This lesson will also involve you incorporating portions of the first lesson – once you’ve decided on the pair of strategies, it’s important that you have a target amount you’d like to reduce that spending by, address whether or not it’s realistic, and track those specific flexible expense (i.e. spending that changes month in and month out) to see if you’re achieving that expected outcome. You may find this “pocket spending guide” helpful towards some of those goals.

Example

Once again, we’ll use the example client from the previous two lessons. If you recall, in order to address their payday spending leak, they made an effort to avoid non-necessity spending for 24 hours upon receiving a paycheck. They implemented a goal to completely eliminate Friday non-necessity spending altogether. To address their dollar store spending leak, they began leaving their debit card in the car when shopping, and just bringing in enough cash, with a goal of reducing monthly dollar store spending from $120 a month, down to $40. For their final spending leak, they made a conscious effort to avoid shopping after stressful days at work, if able. Lastly, they began making a conscious effort to unplug devices with standby power when they’re not being used, hoping to reduce their utilities bill by at least $30 per month. After implementing these strategies, they tracked their expenses for another month. While they didn’t perfectly hit all of their targets (they had to go back and decide if those goals were realistic and there were simply more changes that needed to be made, or if they’re unrealistic and they needed to adjust their goals), they did manage to reduce dollar store spending to around $60, reduce their utilities bill by $20 from the previous month, and while they didn’t completely cut out payday and stress-related spending, they did greatly reduce it, making a measurably positive impact on their financial situation!

Assignment

Track your expenses for another two weeks to a month. Apply the two strategies identified in the previous step, and report back any positive changes in your spending! 

Complete this assignment in Microsoft Word - if you do not have access to Microsoft Word, contact your course facilitator. Once you've completed the assignment, email the Word document with the assignment to your course facilitator, who will provide feedback via email.

*This lesson will take at least two weeks since you have to track your spending to complete it. If you'd like to work on more lessons between then and now, feel free to begin the lessons in Cluster 4 - Manage Credit and Debts (The lessons in Cluster 2 and 3 require the information from tracking your spending, so do not go any further with those!). If you choose to do this, please contact your course facilitator to let them know.