“Revenge spending” was definitely a thing last year, with Canadians eager to indulge after nearly a year of scarcity. But these days, with inflation staying stubbornly high, the cost of food, rent, mortgages and everyday items has increased. Plus, the holiday season is rapidly approaching. How can you balance good financial goals with spending on fun and gifts? Here are five ways to help you spend wisely.
1. See your budget as a tool, not a limitation
Making a budget is a good starting point for better managing your money. It helps you see where your hard-earned dollars are going. Having a budget shouldn’t make you feel deprived. Instead, look at it as a way to gain control of and feel empowered about your money.
Following a budget doesn’t mean cutting out the things you love doing—that guarantees you won’t stick to it. Use your budget to figure out how to incorporate your hobbies and passions into your spending while staying on track financially.
2. Reassess your spending categories
It might be time to reassess your budget, especially if there have been major changes in your life. (Yes, the lifting of pandemic restrictions counts.) Review your spending over the last three to six months. Are there areas where you may need to increase the allocation of money (say, food or entertainment)? Or areas where you could cut back? If some areas need tweaking, adjust your budget with that in mind. You’ll feel better knowing you’ve built in the things you love.
3. Practice mindful spending
We all know the fun of impulse buying, but that can put our budget and wallet into trouble later, if we spend more than we can afford—and end up carrying debt. Instead, take the time to be mindful of where, how and when you buy something. There are several ways to practise mindful spending:
- Define your needs versus your wants. A “need” might be new winter coats for the kids because they’ve outgrown their old ones. A “want” might be more houseplants.
- Instead of saying “I deserve this,” say “I will value this for a long time because…” If you can’t think of a reason, that’s a sign to hold off.
- Research items before purchasing them.
- Comparison shop and look for deals, either online or in printed store flyers, on everyday items like groceries
- Cut back while still having fun. Maybe have one drink (or no drinks) when going out.
- Walk away from your online cart. Take some time to really think about the purchase before you make it.
4. Practice your own layaway for large purchases
The holidays are coming, and March Break comes soon after. If you celebrate the holidays, you’re probably already thinking about how to manage your spending plus how to afford a fun March Break getaway.
These two events can be expensive, so how can you budget for them without feeling too deprived? One way is to break it down into smaller, more achievable steps instead of one big, amorphous end goal. For example:
- Set a goal, such as “I want to save for a March Break vacation.”
- Figure out how you will measure success. It could be setting aside a certain amount of money per month. (Even better, automate your savings with pre-authorized transfers.)
- Be honest with yourself. Can you meet your goal, based on your timeline, and will anything prevent you from reaching your goal?
- Set a reasonable deadline based on the above criteria. Give yourself as much time as you can. The less pressure you feel, the more likely you’ll remain on track and succeed.
5. Get rewards in return for spending
One option to help yourself save money is to collect loyalty rewards that your family can use towards discounts or free merchandise.
