Curb overspending with good financial habits
November 14, 2019
There is a tug of war going on with your money and the temptation to overspend. Unfortunately, consumers are losing.
Overspending is epidemic.
In 2017, research by the credit report bureau Equifax revealed the average Canadian had over $22,000 of debt from credit cards and credit lines.
I’m not just talking about money, I’m talking about your life. Money supports your lifestyle and if it is overspent on excessive consumption for things that are not needed, then the ultimate loser is your life.
Stuff costs money. Eating healthy foods, housing, entertainment, and yikes, have you seen how much the latest iPhones cost?
Suddenly the world is too expensive.
At the same time, Canadians seem to be obsessed with going to their favourite coffee shop. Many order something expensive like a $6 latte.
If that is your habit, and you indulge three times a week, in one year you will have spent over $900 on something you don’t really need. Suddenly a cup of coffee is a major expense.
The opposite side of spending is saving. Many people complain that there is not enough money left over at the end of the month to direct towards savings.
There is a simple solution.
Establish a monthly savings program that automatically transfers money from your bank account to an investment. Spending the money first in the form of regular savings now becomes part of your financial pattern.
Financial planners referred to this as “paying yourself first”.
So the financial challenge in the modern-day world for many of us is to better control our spending and to start saving. It sounds simple but it isn’t.
The conversion from spending to saving can be difficult. I recommend not changing your habits too suddenly or you might derail your transition to better personal financial management.
For example, still enjoy your latte treat but not as often. Start a monthly savings program but consider starting with a small amount.
True financial freedom requires good financial habits regarding spending and saving.