Sydney Sekese, CFP® professional and member of the Financial Planning Institute
Spring is here, and you know what that means. It is time to enjoy the beautiful weather and hold on to your wallet. Because as the earth renews itself and new life springs forward, we tend to seek out some form of renewal in our own lives too. Whether it is new curtains or a new car, expensive parties, dining and many more. Other times, all it takes is a sale on sandals or cool-weather gear to incite a spring spending spree that wreaks havoc on our finances.
I suggest that we use the month of September to shed some bad spending habits. Julie Morgenstern, the best-selling author mentions in one of her books that we should use a SHED plan to help us get unstuck from defunct habits that prevents us from living a richer, more meaningful life. A bad habit clutter is more difficult to shed compared to time-wasting or physical clutter.
Just as the holiday season offers ample and easy ways to spend more money than you should, spring has spending traps too. Here are some common pitfalls to avoid:
A new spring wardrobe:
With warmer weather approaching, all of your favourite stores are in the midst of rolling out new and attractive garments in all of the hottest colours. Some colleague of mine once said that the spring weather could be likened to a siren song for shoppers looking to spruce up their wardrobes. To avoid going overboard or buying things you do not need, it is recommended that you go through last spring’s wardrobe to take stock of the clothing you already own.
Another approach is to rotate your closet by putting the warm weather clothes out of sight in cold weather and vice versa. When you change your closet, you see many things you forgot you had. They look new. This can help quell the urge to shop.
As the warm weather hits, car dealerships are in a fury and for good reason. Painfully aware of the fact that you are dying for a sweet new ride, they are already scheming up ways to pull you in.
Be careful of balloon payment on the cars, giant banners promoting their latest deals. While these deals on wheels can be tempting, remember that dealerships will do almost anything to part you with your money. If you already have a car that reliably gets you where you are going, just look the other way.
So the question is what practical steps can you adopt to shed the bad spending habits this spring? They involve self-introspection and some reflections.
- See how your past holds the key to your financial future
- Face your fears and create new truths
- Be honest with yourself
- Be responsible to those you love
- Be respectful of yourself and your money
- Trust yourself more than you trust others
- Be open to receive all that you are meant to have
- Understand the flow of money
Beware of eye-catching consumption. This refers to spending for the purpose of displaying your wealth or social standing. This type of spending kills your savings gap. When it is financed by debt, such as credit cards and store accounts, your past spending decisions act like a chokehold. This is because the gap never seems to open up. Any extra income, such as a bonus or rental income, may bring relief in the short term, but will not get you ahead.
It is prudent to adopt the old adage: “Don’t go to grocery shopping when you are hungry”. You may end up buying a lot of food (often unhealthy) which you do not really need. The temptation to overspend this season will always be there, but you are the one in control. Use the warm weather to rejuvenate your dedication to financial wellness, and you will thank yourself later.