If you often hold your breath while waiting for your bank account balance to load, or dread reviewing your credit card statements, you may feel that money slips out of your fingers as quickly as it arrives. But by making a few adjustments to how you spend, it is possible to gain control over your personal finances.
We talked to money coach Judith Cane, a financial advice expert who has worked in the financial industry for almost 30 years and works with individuals and couples to build healthier relationships with their money. Cane shares the advice below on how to become a more mindful spender in 2020:
Set your financial goals for the year
Ask yourself what you want to accomplish this year and what steps you will need to take to meet those goals. Is it to save money for a trip? Pay off your mortgage?
"If you write down your goals, assign a timeline, and calculate the cost of what it will take to achieve them, you have a better chance of fulfilling them," said Cane.
For additional support, have an ongoing conversation about your finances with your partner or a friend who's in a similar situation or has similar goals.
“It's just like when you work out – for some it's nicer when you go to the gym with someone," said Cane. “For instance, perhaps you and your partner make an effort to sit down once a week or month to talk about the bills, what's due, and how much you saved in order to see what progress has made toward your goals."
Review your bank statements to see where you spend most of your money
Cane says if you tend to make the same financial purchases that you've always made in the past, then a vital next step is to revise your spending habits by figuring out what actions you can take to prevent those habits from continuing.
"If you see that you are spending a lot of money at stores that have lots of products to buy and this is what causes you to overspend, then come up with a strategy for that. For example, try avoiding these stores for a while," she said.
Are you a frequent online shopper? Cane advises curbing the urge by unsubscribing from online newsletters and deleting any personal information from your favourite sites. This makes it harder to hit the checkout button since you'd have to dig out your wallet, find your credit card, remember all your passwords, and re-enter shipping information.
“Next time you are ready to buy something online, leave it in the cart for a day. Don't click 'buy' right away. Walk away and sleep on it," said Cane.
Put yourself on a cash budget
Once the cash is gone, the spending ends. Handing cash over to pay for your purchases may help as a strategy in being more mindful than simply tapping a machine with your bank or credit card.
Cane says if you do this, you might second guess making a purchase, adding that it is also important, however, to ensure your budget allows for some leniency for it to work.
"It's the same as being on a diet – you will rebel if you fully deprive yourself."
Create separate bank accounts for different types of expenses
To help avoid (or reduce) how much you put on credit, Cane recommends creating individual bank accounts for specific spending categories—and paying into them every month—so that the money is already there when you need it. Some examples of specific bank accounts can include car repairs, kids' activities, holiday spending—and yes, an emergency fund. The categories you create really depend on what your biggest spending items are (another example is starting a gifts or holiday gift account you pay into all year).
“If you've got debt with a 20 per cent interest rate, it might make more sense to pay that down before you create individual bank accounts," said Cane. "But if you can put something into an emergency bank account that you never touch, even just $25 a month, then even while your main focus is on paying down your debt, being able to see your balance go up will help give you confidence that you can manage your money."
Call your friends more often
Have you ever spent money to fill a void in your life or to cheer yourself up after a lousy day at work? Next time you feel lonely or upset, pick up the phone and call a friend instead, says Cane. "Go out with them for coffee, visit the museum on a day when there's free admission, or invite them over for a potluck dinner."
There's truth to the old adage that sometimes the best things in life don't have to cost anything (or a lot).
"For instance, if you and your partner or friends go out several times a week, cut back on these expenses by hosting a games night and potluck dinner," said Cane. “Socializing doesn't have to be expensive, and it's the time spent with those you care about that matters most."