LOUISE FAIRSAVE: Training your spending muscles
Being in control of your spending is fundamental to living a financially successful life.
It is quite possible to expend a fortune in short order, no matter how large that fortune. Spending can be great fun and the more you have to spend, the greater can be the fun. Many famous people have managed to earn and lose fortunes during their lifetimes. Today’s article therefore presents five exercises for developing your muscles for keeping spending in proper control:
1. Spend at least 30 minutes each week planning and reviewing how you spend your money. It is just a little time but it will make the world of a difference to your perspective.
Start reviewing your spending once per week and a side benefit is that your interest in saving and investing will also grow. You will find yourself considering various options and researching different approaches, trying to find what suits your personality best. So, gradually you build on this planning and review exercise until you end up with holistic plans about your personal finances – your spending, as well as your saving and investing.
2. Avoid spending even one cent for a day. When you start this exercise, plan ahead of the day so that you can prepare your lunch, snacks and drinks at home, and that your car has enough fuel and so on. If you are not successful in trying this exercise at first, keep on trying, say the next week, until you succeed.
Once successful, from time to time, redo this exercise. Even better, you can try setting a particular day in the week, each week, where you will not spend any money. You will learn a lot about yourself and derive a powerful sense of control and satisfaction, particularly if you were prone to impulse spending.
You may also develop a deeper understanding of the desperation of the homeless and/or penniless persons who roam the street. We often do not give them a thought, but there are people on the street who do not have any cents to spend. This can provide a powerful lesson for us all in adequately preparing for retirement, too.
3. Avoid eating or drinking from anywhere else but home for a week. Careful stocking in preparation for this exercise is critical. During the chosen and planned week, all food and drink is to be prepared at home: no fast food or fancy restaurant dining. You are likely to be surprised how much you can control spending this way.
4. Avoid purchasing anything at all on credit; give your credit card an entire month’s vacation. Forced to use cash, you should only keep the cash you are willing to spend available when going shopping. When that cash is done, so is the shopping.
5. Scrutinize each expenditure well before purchasing, looking for possible discounts, or for the product or service being available in a generic brand, or for it being on sale elsewhere or at a different time.
These exercises are not meant to take the fun out of life, so ensure that you have fun and remain kind to yourself. However, it is important that you train and develop your spending muscles so that you are in acceptable control.
• Louise Fairsave is a personal financial management advisor, providing practical advice on money and estate matters. Her advice is general in nature; readers should seek advice about their specific circumstances.