Guest blogger: Lora Grant, CFP, FCSI | Financial Planner, Investment & Retirement Planning
- Be mindful – stop before you buy and ask yourself whether this purchase is REALLY something you need or want. Impulse buys can satisfy a momentary itch but that can fade quickly.
- Use the “B” word: budget. Think of your budget as taking control of your money in terms of your priorities and goals, not in terms of denial. You know what you earn and you need to make decisions on how you use that hard earned money. If something is important to you, prioritize and plan to spend money on it. If you want to go south for a winter escape vacation, put money aside for it before you go. Calculate your cost, put aside a bit every pay cheque, then go and enjoy yourself, knowing that you aren’t coming home to a big bill. It will make your vacation even sweeter.
- Love those logos? Does a “Coach” purse or the latest cell phone or the newest model car make your life significantly better? What are bragging rights worth to you? If it’s important, see point .2
- Frugal is in fashion. Find cheaper ways to do the things you love. Go to the movies on cheap Tuesdays, meet a friend for lunch or brunch instead of dinner, get together with friends at home for a potluck dinner instead of going out to a restaurant. Reduce the number of times you treat yourself. If you can’t give up a 4 star dining experience, indulge less frequently, making it even more special- and save money.
- Get the cash habit – not debit, not credit. Withdraw enough to cover your planned spending for the upcoming week and avoid putting purchases on plastic. You are much more aware of your actual spending when you watch your dollars disappearing from your wallet. You’ll end up spending less on things you don’t really care about.
- Beg, borrow or (get it for a) steal: Don’t always buy things, even if you need them. Need a power washer for a weekend project? Do you have to own it or could you borrow it from a friend or neighbour who has one? Could you rent it? If you want to own it for a long time, does it have to be new? I know a guy who wanted a fancy receiver for his home entertainment unit – new was around $2,200 but by looking on line, he found the previous model for $800 used. Works like a charm. Your local library is full of books, CDs, DVDs just waiting to entertain or enlighten you. How many books do you read more than once?
- Only use your credit card when you’ve got the money to pay it off: When you have a larger expenditure you need to make, like a major appliance or plane tickets, use a credit card for the transaction, but pay it off immediately. Often there is an extended guarantee available by using your credit card or you get loyalty points but don’t pay a premium to your credit card company by carrying a balance on your card. That increases the amount you actually pay for the item by the interest you rack up. Take advantage of the perks your card offers you but pay it as soon as you buy the item and then you get the pluses without the minus of paying high credit card interest.
A special thank you to Lora for taking the time out of her busy schedule as a Certified Financial Planner to write today’s blog post!