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Are Spending Habits Robbing You of What’s Important?

In General Budgeting, Manage Money by Phil McGilvrayLeave a Comment

How much have you spent this week? Do you know?

Okay, so have a think back, what have you spent money on today? How about this week? How much has it added up to? Do you know?

If you are like most people, you haven’t really thought about how much you have spent over the last few days. Your first thought is probably – not much, I haven’t really been anywhere to spend money. But what about the bought lunches, morning coffees, take away and parking?

Lifestyle Expectations Throughout Generations

With every generation that has passed since the great depression, our lifestyle expectations have grown. When I was a teenager I remember going out for dinner was a luxury, a special treat reserved for birthdays and special occasions.

Today we think nothing of going out breakfast on a Saturday morning, or having dinner 2-3 times a week, or spending $4 on a coffee or freshly squeezed juice every morning, but have you ever stopped to think what this is costing you? Have you ever really added up what these morning rituals and lifestyle routines are costing you?

Tracking Expenses For a Month

One of the tasks I get all new clients at Grandma’s Jars to do is track their expenses for one month by simply writing down everything they spend their money. It is an eye opening experience! For the typical Australian Gen X and Gen Y these seemingly insignificant spending decisions are adding up to hundreds of dollars every month.

When I go through this list of expenses with clients, I ask them to consider what lasting value they have derived from the money that they spent – in most cases the answer is none! Most of the spending occurred without any great thought because the amounts spent were relatively small; $5 here, $20 dollars there.

Being Robbed of What’s Important

The problem is, those small amounts really add up. Those seemly insignificant amounts rob you of the things that are really important to you; having a good deposit for your house, paying off your home loan in 10 years instead of 30 years, taking the kids overseas, paying off your lifestyle debt.

Creating an Everyday Spending Account

Whenever I take on a new coaching client at Grandma’s Jars, one of the most powerful things we do is modify their bank account structure to support their budget, which includes isolating their everyday spending into a separate account. Everyday spending money covers things such as groceries, petrol, parking, take away, pocket money, coffees, bought lunches, alcohol, dinners out etc. We identify a realistic amount that they are happy to spend on these things and transfer it to their everyday account on the first day of each month.

By separating this money, with the new bank account structure, we provide a physical boundary that says this is how much we have got to spend so we need to make it last. If we run out before the end of the month, then bad luck – its baked beans and mashed potato for the rest of the month. The reality is, very few clients ever get to the baked beans and mashed potato stage, but having the separate bank account creates an awareness that makes them far more conscious of their spending.

Interestingly, within a few months most clients settle into a new routine with their everyday allowance. They find themselves saving hundreds of dollars more a month and they don’t miss whatever it was they were previously spending on. In fact most of them have a hard time figuring out where all the money actually went.

Spending With Intention

If you are a Gen X or Y, I really encourage you to stop and consider the spending habits and lifestyle patterns you have slipped into. For most of you it wasn’t a conscious decision to eat out regularly or to buy coffee on the way to work every day – it just, well, happened! Our blog,  The Power of Healthy Habits,  further explains spending habits and spending with intention.

With 15 years of experience as a budget coach, please let me assure you that unless you are spending with intention, these small regular expenses will rob your of the really big meaningful financial goals. These small amounts really do add up.

The Challenge: Track Expenses For 1 Month

My challenge to you is to track your expenses, by writing down everything you spend money on for the next month – not only will it make you think twice about what you spend, but it will help you identify how much money is slipping through your fingers on a monthly basis.

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