New Year, New Spending Habits

Person writing a chart on paper

The last New Year’s Resolution that is commonly made is to “Spend Less, Save More”. It’s no secret that life can be expensive! Everything costs money, be it shelter, food, items, or fun experiences. Sometimes unexpected events like car accidents or illness and injuries occur and you must start dipping into your savings or spending money you don’t have. Other factors can also come into play, depending on how often you work and for how much, and how many dependants you have in your household. Prices for lots of necessary things have been rising in recent years, which means it becomes more and more difficult to put money away. It doesn’t often need to be said that spending is a lot easier than saving.

If you’ve ever been in a position where you’re living paycheck to paycheck or really trying to stretch your money you know exactly how stressful it can be. You may have started to panic and tried as hard as you could to stop spending money… and then ended up splurging on something the second you had disposable income. That stress and pattern of restriction and splurging can be exhausting. Or perhaps you feel comfortable with your basic life needs, but never seem to have enough to go on a trip or buy an item you have been looking at for a long time. Sometimes it’s nice to treat yourself, but if you feel unable to that can cause a lot of negative feelings as well.

Nobody likes to feel like they’re missing out because of a lack of money. If you are really struggling with your finances, we recommend seeing a professional to help you build a proper budget and work on how to build up your savings. This blog is going to focus on little things that you can do to save money, and help you spend a little less.

1. Seriously. See a Professional.

It can be really overwhelming to see all the different financial advice out there on the internet. Money diets, money blogs, tips and tricks from billionaires… it’s impossible to know where to start with so many different points of view. It can be nerve wracking to sit down alone and review your finances and that anxiety might end with you giving up on trying to do things yourself. Financial Advisors will be able to look at your finances and share strategies for saving that will work for YOU. If you’re not completely satisfied with one advisors answer, visit with another one to get a second opinion and go from there, and remember, you don’t have to purchase anything from them if you don’t want to.

2. Set up an Emergency Fund.

Expect the unexpected! Set the goal of setting aside something even as small as $50 per paycheck for an emergency fund that you DO NOT TOUCH unless you really need to. It might hurt to put that money away if you’re waiting to spend on something more fun, but you’ll be happy you did it if something comes up.

3. Review your Fixed Costs.

Fixed costs are those monthly payments you must deal with no matter what. Be it debt payment, rent, utilities, car payments or layaway items these are the payments you know are coming every month. If it’s easier, tally up the cost of all these payments and as soon as you have the amount in your bank account, move it to a savings account and don’t touch it until it’s time to make your payments.

4. Track Unnecessary Spending.

Keep track of whatever you’re spending your money on that ISN’T related to any of your fixed costs. There’s no wrong way to do this, you can have a calendar, a paper, a banking app or a Microsoft excel sheet. Having your spending habits out in front of you can really show you where your money goes, and where you might be able to cut down on unnecessary spending. The most popular saying is that “If you stop spending $5 a day on coffee, you’ll be able to save X amount in a year”. While that may not necessarily be true for everyone, you might realize how much you’re spending on eating out, buying clothing you don’t need, or on expensive transportation. All things that if cut out, could make an impact on your finances. Not everyone can “cut out frivolous spending” as a method of financial saving, but if you see a significant portion of your money going to things you don’t need… think of how much more could go to your savings or faster debt repayment!

5. Think About the WHY.

In the middle of a spending binge the last thing we think of is “Why am I buying this?”. But by being conscious of WHY we are spending money on an item we can change our spending habits. Pay special attention to sales! Are you buying this because you’ve been waiting to buy it for a while and now you can swing it? Or are you buying things “just because it’s a great sale”? Is the item you’re buying practical or needed? Or are you buying it to fulfill an emotional desire or fantasy? For example, looking at a scarf that would look great while you’re on a vacation might really be you trying to bottle the feeling you get on vacation. Instead of buying the scarf, you could save for an actual trip! Are you using SkipTheDishes instead of making your own meals because you really want Chinese food? Or are you using it because you just don’t feel like cooking for yourself? What would make you excited about cooking for yourself instead? Focusing on the REASON you’re spending the way that you are can be a powerful game changer. The next time you find yourself really holding on to an item or if you’re about to make an impulse purchase, try waiting 24 hours to see how you feel the next day. If you’re still thinking about the item revisit the store and decide from there whether to make the purchase.

6. Be Wary of Money Diets.

Money diets are tempting, but not all advice is created equally. Unfortunately, strict money diets may lead to crashes. Brains are great at focusing on negatives as opposed to positives. If you put yourself on a strict no-spend rule without preparation you are more likely to notice all the things you can’t buy. Not only is this stressful, but when you finish the period of not spending, you’re more likely to go overboard with purchases now that you’re ‘allowed’ to buy things again. If you’re really looking to limit your spending, try allowing yourself a small cash budget and say NO to using your debit or credit cards.

7. Remember that it’s OK to mess up!

Money and spending can be emotional to talk about. If you stray off the path of your budget or plan, don’t feel ashamed or upset. It’s only human to make mistakes occasionally! The important part is that you get back up and commit to your plan again. Focus on the long-term gains and remember why you started trying to save in the first place.

Finances can feel scary and uncomfortable but if you plot a course of action and keep yourself on track as best as you can, in the New Year you might just find yourself surrounded by purchases that really make you happy, and a safety net of savings as well.

Disclaimer: This article is for information purposes only, it is not intended to replace professional financial advice. Please consult a professional for your financial needs.



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