A guest post by Louise, with a very worthwhile post about new year resolutions…. how many of you are keeping your financial-based resolutions now that it’s almost February?
Like many other people, one of my resolutions this year is to cut back on my spending.
It’s a common resolution to make, yet so many of us fail to stick to it every year simply because we go about it the wrong way.
If you stop to think about it, January is really the worst month to make this decision. Sales are on everywhere and because of the way the human mind works, if something appears really cheap we’ll automatically think it’s a bargain and buy it even if we don’t need it.
Is it really a bargain though?
It’s like those 2-for-1 offers in the supermarket. I always used to fall for those, thinking I was getting a bargain, until I actually looked in my cupboards one day…they were full of food I’d gotten on these offers and never used. Since then I never buy anything on BOGOF unless it’s something I always buy anyway – that way I know it won’t get wasted.
The same applies to the Sales.
I’ve been wanting to get a new car seat for my daughter for a few months now as she’s almost out-grown her old one, but I decided to wait until the sales. On the 27th December I trotted down to Halfords and picked up a shiny new car seat for £60 which my daughter loves, and saved myself £50. But if I hadn’t been looking to get one in the first place that would have been a waste of £60.
The bottom line: It’s only a bargain if you would have bought it at full price anyway!
So if cutting back is one of your resolutions, what can you do to maximise your chances of success?
There are 3 main reasons why people fail at keeping resolutions pertaining to spending.
1 – Going cold turkey and trying to resist spending anything.
Ex-smokers will identify with this; it’s much harder to quit if you just stop the cigarettes altogether and don’t replace them with nicotine patches or gum. It’s the same with spending. People do need to buy things but it’s a case of everything in moderation, or finding a substitute that doesn’t cost as much.
If your passion is for clothes, go to thrift stores and charity shops instead of department stores and boutiques. If, like me, you tend to splash out on books, join a library or again use charity shops.
2 – Looking at your goal in a negative or general way.
Instead of just saying “I have to stop spending this year”, try thinking of something you want to achieve as a result of reducing your spending.
For instance, I’m planning a series of mini-breaks this year costing a total of £400, and this has to be paid by mid-February. So for the next few weeks my husband and I are cutting back all non-essential spending in a bid to save this amount. It’s hard but knowing we’ll have those holidays at the end of it makes it worth it.
You could also try opening a savings account which will allow you to deposit money and see the balance whenever you want. Every time you resist spending money on something, put it into the account and as time goes on you’ll be able to see concrete proof of your efforts. And if it pays a good rate of interest, even better!
3 – Assuming you have iron-clad willpower.
Look at your typical spending habits; do you tend to buy online after seeing an offer in your inbox? Do you regularly go into the city on a weekend with friends and end up with armfuls of purchases? Whatever your particular shopping temptation, it’s easier to avoid it than assume you can handle it.
So unsubscribe from all those emails which shout about the latest offers from your favourite retailer. Cancel your weekends or suggest alternatives which don’t involve shops (but tell your friends why so they don’t stop talking to you!). If you do decide to go out, take a small amount of cash with you and leave your cards at home. Remove temptation, don’t try to resist.
One final tip
Procrastination is your friend when you’re cutting back your spending.
If you see something you want, don’t buy it right away. Remove yourself from the object of temptation (leave the store, click off the website) and make yourself wait a day, a week or a month. Then ask yourself if you still want that item. You probably won’t but if you do, at least you’ll have had time to ponder your purchase and will have avoided impulse buying.
Have you implemented any interesting strategies to save more money in 2012?