How to control your spending

When one is confronted almost every other day by the circulars from the big retail chains coming into the house, and ads on the television, and all of the other ways that we are exposed to ads, it soon becomes difficult to put a rein in on your spending.

Whatever your personal passion, there are always more innovations and different upgrades to products – more features, more benefits – coaxing you to part with your hard earned dollars. What is tricky is how not to regret parting with those dollars, and having financial grief over purchasing that latest knick- knack because the ads drew you to it.

This is where learning to control your spending comes into play. When one is on the frugal journey, one need not go without – but one learns to be that little more creative and adopt some strategies of ingenuity in order to satiate the passions that drive us.

The first point goes without saying – create a budget for yourself. If you don’t like the word budget (and it can sounds awfully restraining and restrictive) then really essentially it is a spending plan. Make sure you also put into your spending plan all the essentials, including savings, and debt reduction. Then with whatever amount you have left over, that can be your allocated cash allowance per week.

Using cash is fairly much a good control mechanism for controlling your spending. If you put your purchases on plastic – it doesn’t “hurt” as much, because you can’t actually visualise yourself parting with money. Whereas if you use cold hard cash – the reality of what you are spending it on soon you will come to grips with as you see the cash dwindling out of your wallet. There is a certain comfort in having some money still retained in your wallet. It provides a psychological buffer against being completely broke.

If you don’t like the idea of carrying cash about, or you are more of the online kind of shopper (for groceries, or online auctions or anything at all) consider getting a debit card – one that you can use as a credit card for online transactions or over the phone transactions, but the money that you spend out of it comes out of your monetary funds, not the financial institutions – so you will avoid the interest trap.

The other option you have, if you are not able to obtain a debit card – is to go and get a prepaid Visa card. These are available in various places, including some post offices or gift card outlets.

If you do have a credit card – the most useful thing you can do with it is to send it back to the issuer – or put it on ice. Get an old ice cream container, put your credit card (or multiple credit cards) into the ice cream container and fill it with water and pop into the freezer.

If you do have credit card debts – it is wise to go an access some independent financial advice – such as a financial counsellor. They can help you negotiate with your creditors, and sit down with you to formulate a fair and reasonable spending plan for yourself.

If you have difficulty saving, open up a separate bank account, and get your employer to deduct money out of your pay, and put it into your separate bank account. You are not likely to notice the money if it isn’t in your main account, and all the while your account will slowly be building up.

If you have serious issues trying to avoid getting access to your savings account, consider getting an account with a passbook rather than an ATM card – remove the convenient access to that account. Also if you have a trustworthy partner and you have the same goals to save – get an account where you both have to co-sign to get money out of the account – recommended only in situations where you have voluntarily done this and you will not be in a situation where you will be subject to exploitation. If you can maintain your own independent savings, then do that first.

Finally when it comes to actually spending there are a number of tips that can help you reduce the money coming out of your weekly cash allowance, and help you to stretch those spending plan dollars further:

For big ticket purchases (for example anything over $100), consider the 24-48 hour rule. If you really want it/need it – wait 24 to 48 hours before purchasing the item. That will give you enough time to really consider whether you can afford your purchase, and also to compare prices elsewhere.

Consider lay-by or lay-away. This is an option where you can go into a larger discount chain who offer this, and put a minimum percentage of your purchase down as a deposit, and then make small weekly or fortnightly payments while they hold your purchase. There may be a small administration fee associated with this, but it can help you to slowly purchase those larger items, or put items away when you have purchased them on sale. You have a number of weeks to pay for the item completely. Some stores may offer longer payment times for seniors or people with disabilities.

Put together a wish list. When you get paid every week, you may get the temptation to go out and blow it all at once, regretting that you have wasted the dollars you were going to put towards your wish list purchases. If you see something in the circulars or on television that you really want to buy, put it on your wish list. Then when you get your weekly cash allowance, you have the freedom to prioritise where you will spend your money, and be less likely to regret what you purchased.

Avoid impulse buying where you can! Folks have often gone straight into a store to purchase something, only to find out a few days later they could have gotten it cheaper elsewhere. Always try to be creative and stretch your weekly cash allowance further by seeing what prices are elsewhere.

There is an exception to the impulse buy rule. Some of your weekly cash allowance you could consider putting away for those small, indulgent impulse buy luxuries. Consider for example – putting away several dollars here and there for your favourite magazine, or a great bottle of wine, or the Sunday newspaper.

Other ways to control your spending are by considering other ways of saving – for example:

Reduce, re-use, recycle – join Freecycle – www.freecycle.org - you will more than likely have access to a local Freecycle network where you can offer your old stuff to others, and make requests for things that you may need or want. This helps the environment also by reducing consumption, and stopping things from unnecessarily going to the landfill.

Look up books on DIY home repair and restoration – scour places like the second hand furniture stores, junk shops, garage sales, flea markets and even some local council landfill have stores where you can access stuff that has been salvaged before it ended up as possible landfill. You can find plenty of books at your local library, or do online searches for how to creatively restore different items.

Don’t ever forget to comparison shop – check out websites for different prices – for example in Australia there is Shopbot – www.shopbot.com, or there is Getprice – www.getprice.com.au. Check out online auctions sites for available prices there also, e.g. Ebay – www.ebay.com.

Don’t also forget to check out the dollar stores – sometimes they have parallel imports that can be of a suitable quality for your use. Make sure that the store has a guarantee that if you find that the product is substandard, that you have the rights to return it and get a refund.

If you feel so inclined, make it yourself. Do a web search for an article that explains how you can make something for your own use, or check out books from your local library.

As you can see, there are a number of ways to consider how to control your spending. Controlling your spending does not have to be a painful exercise. It can unleash your creative and ingenious side, and you can be a model for others in how to maintain a great lifestyle on a shoestring budget. There are a myriad of frugal living websites on the internet. Find the information that you need, and that will help – and set yourself a challenge of living the good life without financial headaches.