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What Is Responsible Spending?

Better money management starts with smart spending choices.

Saving money is a powerful financial goal, but the amount you can save will almost always depend on how much you spend.  

Spending responsibly means making thoughtful, intentional decisions that align with your values and long-term financial well-being, rather than spending reactively or beyond your means. 

For most people, money is a finite resource—and spending a large amount in one area, such as a home improvement project, means choosing to spend less in another area, such as a vacation. Or by choosing to live in a lower-cost geographical area, you may have more money available for travel or a child’s college fund. On the other hand, purchasing new clothes and shoes with a credit card when you don’t have the cash to pay the bill means your money will be used to pay off credit card debt rather than save for retirement, for example.  

In a recent survey of Forbright Bank’s Growth Savings customers, when asked which actions made them feel proud of how they manage their money, 71% said responsible spending.  

7 Habits of Responsible Spenders

If you want to build a habit of responsible spending, there are several steps you can take. Responsible spending typically includes the following key principles and practices:

  1. Live within your means. That means you spend less than you earn and avoid debt for non-essential purchases. This creates a foundation for financial stability. 

    When it comes to managing money, Growth Savings customer Terri A. says “never spending more than we make” is what makes her most proud. 

  2. Prioritize needs over wants. The focus should be on covering essential expenses first, such as housing, utilities, food, transportation, and minimum debt payments. Any spending on discretionary items, like entertainment or luxury purchases, should be second place to your needs. 

  3. Build an emergency fund. When you set aside money for unexpected expenses like medical bills, car repairs, or job loss, you can be better prepared to deal with emergencies without derailing your budget or adding unnecessary debt. A good rule of thumb is to build an emergency fund with three to six months’ worth of expenses.  

    For Growth Savings customer Sarah P., “being able to pay for unexpected expenses without feeling nervous or stressed” makes her most proud of her money management.  

  4. Avoid impulse purchases. Before buying something, take time to consider whether you really need it. This is especially important for larger purchases. One valuable approach is to “sleep on it” before making a large purchase. Give yourself 24 to 48 hours to think about the purchase and compare prices across different retailers before buying something large.  

  5. Plan for the future. Create a personal financial plan that includes allocating money toward long-term goals like retirement savings, kids’ college education, home renovations, or charitable giving, rather than spending all your income on immediate gratification. 

    “Responsible spending and saving allows me to donate to causes I care about,” says Martha H., a Growth Savings customer.  

  6. Be mindful of recurring expenses. Take time to regularly review subscriptions, memberships, and automatic payments to make sure you’re still getting value from them. 

  7. Shop comparatively. When you’re ready to make a purchase, research prices and options first. This is especially important for significant expenses, to make sure you’re getting good value for your money. 

Disclaimer: This article is for general information and education only. It should not be considered financial or tax advice.

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