Final answer:
Avoiding temptation and creating a budget are essential for controlling spending habits. Balancing a checkbook and finding areas to save money can also help. Behavioral economists recommend 'nudges' to guide rational behavior.
Step-by-step explanation:
Avoiding temptation is an important aspect of controlling spending habits. By paying bills on time and not using excessive credit, individuals can improve their financial situation. Creating and adhering to a budget is the best way to ensure enough money is coming in to cover expenses.
Balancing a checkbook regularly helps manage finances, track cash flow, and prevent overdrafts. Additionally, reviewing and adjusting the budget can uncover areas where expenses can be reduced or eliminated, freeing up discretionary income. Traditional economists assume complete self-control, but behavioral economists suggest using 'nudges' to guide rational behavior. For example, automatically enrolling employees in retirement savings plans has proven effective. Budgeting allows individuals to track income, expenses, and financial goals.