It is important to be a smart spender all year round but as 2015 comes to a close, it would be a good idea to look into all the financial lessons you learned this year and bring it to the next. This in turn should help you become better in handling your finances particularly your spending needs. It is always better to be proactive with your finances that deal with problems you could have avoided.
There are a lot of people who prefers to spend as little but you need to keep in mind that there is a difference between being cheap and being frugal. Some people associate the least amount of spending as possible as being frugal but they are actually being cheap already. Opting to dumpster dive just to save on food and other extremes that allows them to use money as little as possible.
As you earn money, you need to understand that the problem is not with spending because it is inevitable that you will use your money. You need it to buy food and clothes and pay for your house and other utilities. Spending is not the root of your debt problems. The obstacles usually emanate from uncontrollable spending that leads to unmanageable payment obligations. You need to be a smart spender.
The holiday season is a perfect opportunity for consumers to mishandle their spending because of all the shopping opportunities and needs. Statisticbrain.com shares that consumers will spend over $800 shopping this holiday season. This can be for themselves and for family and friends but this number can quickly balloon up to big amounts.
Being a smart spender for the new year
As you end and start a new year, you might have a lot of things on your mind and lose focus on your finances. Here are a few things you might want to keep in mind to help you be a smart spender in the coming 12 months.
- Do not fall for sale rush. Smart spending decisions is often called for when you consumers come across sale promotions in the mall or even with online stores. You need to be composed and think of your long term goals before splurging your hard-earned money. There are ways to get out of that urge to spend on a sale. One is to simply walk away from the store or close your computer if you are clicking away on your favorite online shop. Move away and see if you still feel the urge to go back after a few hours.
- Always compare prices. This is a habit you need to carry over to the next year which you should have used this year when buying for gifts. There are some people who has the habit of shelf shopping and not really doing any prior research when buying things. At the very least if you do not have ample time to put into researching beforehand, try comparing prices on that day. If you are doing groceries, compare different brands and see which one is less expensive. If you are purchasing clothes then look at different shops so you can have a feel of the prices.
- Be prepared with a shopping list. Before heading on out to buy for anything, you need to arm yourself with a list and be a smart spender. Whether you are doing the groceries, buying New Year food or simply heading on out for a quick errand – always have a list. It can help you remember what you were supposed to buy and much more importantly, help you stay away from impulse purchases. Establishments most especially the grocery has a way of getting you to notice particular items such as putting them on eye level or on the checkout counters. Make it a habit of having a list and it will help you be a smart spended this coming year.
- Use your credit card wisely. Time.com shared in an article that the interest rate would see an increase by about a quarter to a half a percentage point this coming year. This means that for those who are unable to make good use of their credit cards, they can see a slightly higher repayment amount. This is all the more reason to make sure that you use your credit cards wisely because it will be a lot harder to meet the payments when you start missing your due dates. You start paying for interest that you should have been earning with investments. Think before you spend and see how you can increase your financial stability first rather than spending your money.
Mistakes in the early months
Once you have an idea on a couple of things that can help you manage your spending and your finances in general for the coming new year, you need to look at the most common pitfalls that you might make. Knowing these can help you identify and hopefully avoid them in the future. Here are some things you need to watch out for especially during the first few months.
- Painting the town red for no reason. You might have some leftover money from the holiday season that you decide that the best way to start the year is to buy new clothes, new gadgets, new appliances and even a new car. There is nothing wrong with wanting to have new and even finer things in life but if this means that you will be in perpetual debt, then you are better off enjoying what you have. You do not have to please anybody and you must not allow the brands to define who you are.
- Opening new lines of credit. One of the credit score sins is inquiring and opening another line of credit or taking out a loan because lenders and creditors perform a hard pull on your score causing it to dip slightly. If you take out multiple loans at the start of the year or even just inquire about it – multiple hard pulls could cause your score to go down. It can affect future loan applications and you might get stuck with a high interest rate because of it.
- Buying big ticket items. Investopedia.com defines high big ticket items as those purchases that are quite significant in amount as well as value. It can be a car, a house or even jewellry. These purchases will make a significant dent in your finances and not a decision to be made on a whim. This takes forward planning and a lot of money management to be even possible especially if you are running a tight budget.
- Not having a long term goal for the year. You need to start the year with a goal in mind even with your finances. You can look at splitting those long-term goals into annual landmarks that you can measure up to. You can also start putting in smaller short term goals that you can measure up on a monthly basis.
You need to be a smart spender this coming new year to be able to get away from the debt problems that has either plagued you in the past or putting a shadow on your future finances. The better you manage the money you have with you, the better it can serve you in the future.