MINDFUL MONEY: How to ditch debt and spend lessJul 11, 2018
What does summer mean for your family? Picnics at the beach, vacationing at the cottage or music festival road-tripping? Summer adventures can make for some wonderful memories, but they can also add up to serious debt if you’re not careful. So why not skip the guilty conscience and drained bank account and find a better way to connect with your money before summer is over and it’s time to face the music?
Is mindless spending adding to your debt load?
You know the drill — those little excuses we all make to spend, even when we know we shouldn’t. Because it’s summer, right? Whether you justify a new kayak or paddleboard for the cottage or you’ve got your sights set on a cabin cruiser, if you can’t pay upfront, the outcome will be the same.
Most often, it’s the smaller purchases that add up fast — ice cream on the boardwalk, dinner and drinks with friends, those must-have concert tickets. The point is, ANY purchase you make without consideration can turn into that hard-to-pay-back debt.
So, before you tap that credit card again, here are some questions to ask yourself first:
- How much will this purchase cost me long term? You might be sacrificing something more important in order to make an impulse purchase.
- What goals am I sacrificing in order to service my debt? Do you have a clear debt repayment plan? If not, you’re likely treading water like so many other Canadians. Take some time to get reacquainted with your financial goals by making some visual reminders that will help you stick to them.
- How much interest am I paying on my purchases each month? Think back on a larger ticket item. Have you paid it off yet? How much is the interest costing you each month?
How to practice mindful spending
Being part of a constantly connected society doesn’t give our brains much time to process everything that happens in a day. The problem is, once we start to detach from important decisions, the outcome can be negative. This is especially true when it comes to spending. To increase your awareness, try these strategies before you spend:
- Notice your spending habits. Are they fueled by underlying emotions such as stress, boredom, sadness or FOMO? The next time you’re about to hit the checkout online or in-store, stop and assess why you’re making this purchase. Will it make you feel guilty afterward? Will it sabotage your financial goals?
- Assess your wants and needs. Look back on your spending for the past month. Did you need that new outdoor patio set? In the future, identify each purchase using these two categories. This isn’t about sacrificing everything you love, it’s about striking a balance.
- Learn your triggers. Whether it’s that one friend on social media who inadvertently fuels your impulse spending or something more subtle like hunger or boredom — find out what makes you spend impulsively and try to avoid those situations.
- Think about your purchases in terms of hours. How many hours will you have to work to pay off a big purchase? Did that $1,000 purchase equal half your paycheque? And, if you’re accumulating credit card debt to fund these expenses, how much more are you paying with interest charges?
- Use all available resources. Set a clear path for your financial success by:
- Following a budget
- Paying more than minimum payments on your debt
- Being mindful about your spending
- Delaying major purchases for at least 24 hours to avoid impulse buying
Play the long game
During the summer, there are plenty of opportunities to spend and Canadians expect to spend even more this summer due to higher costs. Make your purchases count while keeping your goals in mind. Think about all the upcoming expenses such as back-to-school shopping, Halloween, Thanksgiving and the December holidays (they’re closer than you think). Make an effort to ditch the debt and spend less now and you might not be singing the same old tune once January resolutions come around again.
How will you incorporate mindful spending? Connect with us on Twitter to share your thoughts #DebtSolutions #MindfulSpending #Budgeting