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Personal Finance

3 tips to outsmart the algorithms that want you to spend

Financial expert and author Jennifer Beeston talks about how to curb your compulsion to spend.

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Getty Images | Peopleimages

When it comes to managing your money, it can often feel like the deck is stacked against you.

Creating an effective budget can be a challenge, especially when inflation keeps pushing the costs of everyday necessities higher. And as technology keeps advancing, targeted ads and other tactics used to get you to spend more are harder to avoid.

All of this can lead to unconscious spending. "We have the highest amount of credit card debt in history right now. And I think a lot of that is driven by the fact that people don't even realize what they're spending [money on]," says Jennifer Beeston, financial expert, mortgage originator and author of the upcoming book "Brainhacked: How Big Tech Trains Your Brain to Spend — And How to Fight Back."

Although spending money often feels easier than saving it, you can do more than helplessly rage against the machine. CNBC Select spoke with Beeston about how you can empower your finances by fighting back against the technology designed to entice you to spend more.

3 ways to fight unconscious spending

Practically everything you do online is tracked in one way or another. That information can be used to target you with ads when you're most likely to hit the buy button. "Every time you open up your phone... you have the world's greatest salesman pitching to you," Beeston says.

If you've been struggling with spending more than you'd like, here are three tips to help you reign in your budget and be more intentional with the purchases you make.

Cut the subscriptions

Subscription services are a big part of the unconscious spending trap. If you had to list every subscription you have and how much it costs without looking it up, how many could you remember?

An increasing number of services are moving to a subscription model. You can even buy a subscription for heated car seats in some countries. This is the future, with bits and pieces of what we once bought whole being resold to us monthly, Beeston says.

On top of that, the vast majority of free trials end by auto-enrolling you into a subscription plan. And you can't always unsubscribe with the click of a button.

Beeston recommends going through your credit card and bank statements to identify recurring charges. Write them all down and how much they cost, then ask yourself, do I need this? "Cancel everything you're not passionate about," she says.

If you want to fight fire with fire, you can also sign up for yet another subscription service — except this one helps you manage the accounts you've left in the wake of your free trials and sign-ups. Rocket Money (formerly Truebill) is an app that (among other things) can link to your bank account, analyze and identify your subscriptions, and then cancel them on your behalf.

Rocket Money

  • Cost

    Free, with the option to upgrade to Rocket Money Premium for a fee of $4 to $12 per month (with 7-day free trial). Bill negotiation costs between 30% to 60% of the 12-month savings achieved as a result of the negotiation.

  • Standout features

    Easily cancel unwanted subscriptions, track your spending and credit score, automate savings and get help lowering bills

  • Categorizes your expenses

    Yes, Rocket Money instantly identifies your top spending categories

  • Links to accounts

    Yes, bank and credit cards

  • Availability

    Offered in both the App Store (for iOS) and on Google Play (for Android), as well as online

  • Security features

    Rocket Money accesses users' transaction data via an encrypted token, uses Plaid API so user credentials are never stored, provides bank-level 256-bit encryption and hosts servers on secure Amazon Web Services (AWS), which is used by the Department of Defense, NASA and the Financial Industry Regulatory Authority (FINRA)

Terms apply.

Pros

  • Negotiates cell phone and cable bills, plus helps you get refunds for some bank fees
  • Free version available
  • Syncs to your bank accounts and credit cards
  • Instantly finds and tracks your subscriptions
  • Website says 80% of people save money by using Rocket Money (formerly Truebill) to find and cancel unwanted subscriptions
  • Provides breakdown of user spending and notifies of upcoming charges and low balance alerts
  • Helps users create a budget
  • Users can see their Experian VantageScore 3.0 credit score and get access to their credit report
  • Provides an interest-free pay advance up to $100 directly to qualifying users' checking accounts
  • Users can set goals, save money with autopilot Smart Savings feature
  • Concierge service available to identify bills to be lowered and, for a fee, Rocket Money (formerly Truebill) will negotiate on users' behalf for the best rates (non-refundable negotiation fee is anywhere from 30% to 60% of the 12-month savings achieved as a result of the negotiation)
  • Rocket Money (formerly Truebill) Premium Service features include free access to Smart Savings feature, unlimited budgeting categories, custom spend categories, real-time account balance updates, premium chat, subscription cancellation concierge, “Truebill Offers" and educational material
  • Coming soon: Users can track their net worth
  • High Trustscore rating of 4.3/5 stars (from 392 reviews)

Cons

  • Costs between $4 and $12 per month to upgrade to Rocket Money Premium Service
  • Non-refundable negotiation fee anywhere from 30% to 60% of the 12-month savings achieved as a result of Rocket Money's bill negotiation on users' behalf
  • Less than 10 Better Business Bureau reviews
  • Does not negotiate internet, landline phones, cable/phone/internet bundles, alarm and security systems, satellite radio/TV or electric bills

Just keep in mind that these types of services may not find every subscription in your life. And while these services help you manage your subscriptions, they also follow the same model. That means you'll have to be comfortable with having at least one subscription to manage.

If you do end up keeping a few subscriptions, you can ensure you're getting the most bang for you buck by using the right rewards credit card to pay. For instance, if you just can't give up your Netflix or Hulu account, you should at least pay with a card that gives you bonus rewards on streaming purchases.

Make every click count

What you interact with online builds a profile of you that can be used to help companies market to you. "Every time you click you are telling the algorithm that they can make money if they show you that content," Beeston says. Each click, view or comment helps refine what you are shown online, so it's important to be mindful of your online activity.

Beeston suggests throwing a monkey wrench in the ad machine by purposefully interacting with content you're not interested in. Watch a few videos of something you normally wouldn't pay attention to, whether that's crocheting, hiking or stamp collecting. "With just a few clicks a week you can have ads tailored to what you don't love, which makes you less likely to buy and makes it harder for the algorithm to figure out what to sell you," Beeston says.

Go cold turkey

To understand how much you spend online, Beeston says you need to cut the habit for a month. Take 30 days and commit to buying nothing online.

Online shopping is easy and "is 100% designed to make you click away your money without a second thought," Beeston says. When you have to get up and go to the store to do your shopping, it adds a layer of friction between you and the purchase. If it takes longer to make a purchase, you have more time to identify things you don't need.

This approach takes some extra willpower on your part, but Beeston says it may be easier than you think and that your wallet will thank you.

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Bottom line

As marketing technology advances, it becomes easier to fall into a pattern of unconscious spending. But there are ways to take things into your own hands and to focus on only making the purchases that matter to you.

Start by taking a look at your subscriptions and cut the ones you don't use anymore. Pay attention to what you click on and the accounts you follow on social media, all of this activity can be used to target you with highly tempting ads. And if you want to get a good idea of how much you're spending online, commit to not buying anything online for 30 days. When you have to put in extra effort to go shopping, you may find that you spend a lot less.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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