8 Ideas to Better Manage Your Spending
I was recently asked for some suggestions around what people should not do with their money. I don’t like the word should. I also don’t like speaking in the negative when it comes to what we ‘should’ do with money. But the exercise did make me think about some small steps we can all take to ensure we are managing our money well on a day to day basis. Here they are:
1) Don’t spend to make yourself feel better – we often spend when we are feeling sad, upset and even scared. Think about why you are buying what you are buying and do you really need it. Or are you experiencing a behaviour similar to emotional eating? If you are, recognise it and put the credit card away.
2) Don’t sign up to online mailing lists – it might sound sensible to be notified of discounts and sales but it can also be so very tempting when you receive emails offering discounts to click and buy what’s on offer even if you didn’t know you needed it 5 minutes before! It’s a bargain right! They have deadlines to prompt you to act quickly so the marketing is very clever. If you don’t get the email, you will be less tempted to indulge in unnecessary shopping.
3) Don’t make large purchases impulsively –take at least 48 hours to think about a large purchase. Sales personnel are trained to get you to make quick decisions. To prevent buyers remorse and ending up with expensive items you don’t need, don’t buy on the spot. Get the relevant information and take at least 48 hours to think about it. A 48 hour rule not only makes it more likely you will only buy things you really want but it also gives you time to shop around for the best price.
4) If you are unable to clear the balance on your credit card every month, use cash or your debit card instead. Credit cards are convenient and often offer great benefits such as air miles, cash back or access to gyms for example. However, not paying off your credit card balance is a very expensive form of debt. Sometimes up to 40% per annum. Only use your credit card if you know you have funds and the discipline to pay it in full each month.
5) Don’t use your credit card for cash – withdrawing cash on your credit card is very expensive. Most banks charge a large transaction fee plus a much higher interest rate on the cash amount withdrawn compared to what is charged on the purchases charged to your card.
6) Don’t rely on loans for your rent - thankfully many landlords are now accepting multiple cheques and the need to pay your annual rent in one payment should no longer be required for most tenants. Ensure you plan ahead and put aside enough money each month into a separate account so when your rent cheque is due you have cash to pay and don’t need to seek a loan and pay interest on the repayments meaning your rent is even more expensive than the amount on your lease.
7) There are so many discounts at the moment, avail of them whenever you can. When you do need to make purchases your goal should be to spend as little as possible on those purchases. Use loyalty points or discount apps such as the Entertainer or Airmiles ME. Check with the cashier if their shop, restaurant or café has any partnerships or discount agreements ongoing at that time. These arrangements change all the time and so it’s good to ask each time you are purchasing, even if the last time no offers were available.
8) Don’t continue with subscriptions you no longer use – Go through your credit card statement and list all subscriptions you are paying for. Ask yourself if you really need them. Or are you paying for a streaming service you no longer watch or listen to? A magazine subscription you no longer read? Or maybe an audio book service you don’t listen to anymore as you are working from home and don’t spend so much time in the car. Cancel the ones you no longer use. Also review what you are paying for. If you can reduce the level of service from the ones you do use but don’t need the extras the VIP service provides for example it’s a saving too. These amounts may seem small but they can add up very quickly to significant amounts.
I hope you find these useful in your day to day spending. I’d love to hear any other ideas you have.