Spend smarter, spend less

When you spend better, you spend less. As long as you stick
to your plan.

Marie-Christine Daignault | Desjardins Group

There are lots of opportunities for easy spending. While some purchases are necessary, others are less so. How can we reconcile our wants and needs?

First, the necessary: rent, car, insurance, groceries, clothing and so on.

Then there are the little luxuries: movies, dinners out, hobbies, trips, magazines, music, etc.

And then there's the other category of expenses: dinner out because the fridge is empty, the 28th pair of shoes, the "cool" shirt that stays in the closet with the tag still on it...

When it comes to impulse spending, it's this last type of expense that will do the most damage to your budget. 

We all know how easy it is to be tempted, so here are 3 rules for better spending:

Rule 1: Identify what really adds value to your life
It's so easy to spend without a second thought. A movie here, a piece of clothing on sale there, dinner out... You take out your card and it's done! On average, we spend over $300 a month on things we don't need.*

But the satisfaction we get from some of this impulse spending can leave an after taste of regret. Once you get home, you might find yourself asking: Why did I just buy that?

The goal: to determine what purchases you won't regret, meaning those that will add real value to your life. It's not about determining their usefulness, but rather, how much true satisfaction they'll bring. 

Rule 2: come up with a smart spending plan
About 40% of people say they've bought things they'll never use.* Knowing what kind of purchases you'll regret later is the basis for developing a smart spending plan. 

Your plan should:
a. List good and not-so-good expenses 
b. Prioritize purchases that add value and those you want to eliminate
c. Include specific, realistic strategies to keep you motivated
d. Prioritize actions to take. Careful! It's a common mistake to try to change everything all at once. Start small and tackle the easy stuff first. 

The goal: gradually eliminate low-value purchases and make room for value-added purchases. 

Rule 3: take responsibility for your choices and stick to them
This is the hardest part! It's up to you to figure out how you'll stay on track on a day-to-day basis: encouraging texts, note on fridge, photo of what you're saving for that you keep in your wallet ... 

The best part of all this? When you spend better, you spend less. As long as you stick to your plan. 

Although it's a simple concept, it can be hard to put into practice. But it pays off in the end. Ready to try it for yourself?

*BMO Psychology of Spending Report completed by Pollara 

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