As spring shifts into summer, seasonal spending habits can take a toll on your savings. But one personal finance expert offers advice on how to avoid overspending this year.
鈥淧eople are coming out of their houses, socializing, starting to be out in the world,鈥� money expert Robyn Thompson told CTV鈥檚 Your Morning on Tuesday. 鈥淲hen they do that, often you have a 鈥榝reshen-up鈥� of (your) wardrobe. You have a 鈥榝reshen-up鈥� of some items in the house, and you start to spend some money on things that make you feel great.鈥�
Thompson explained that the added pressure of social media can trap us in a cycle of spending desires that are difficult to dismiss.
鈥淲e live in an influence culture, so we start to see on our feeds everything that people are spending money on, buying, doing, all their experiences, and that could cause a bit of insecurity in our own life, psychologically,鈥� she said.
鈥�(Fear of missing out) is rampant in our culture. So it鈥檚 really about getting an understanding of how we鈥檙e spending money, what it looks like, and does it support our longer term goals?鈥�
Thompson pointed out that behavioural research has shown more discomfort in consumers 鈥渟helling out hard cash鈥� than those using other ways to pay, such as debit or credit cards.
鈥淲e live in a digital currency,鈥� she said, explaining that this could lead to more impulsive spending that clears the way to 鈥渋ncreased debt and reduced savings.鈥�
Thompson suggests combatting this through maintaining further transparency with monthly expenses.
鈥淵ou want to take a look at your spending,鈥� she said. 鈥淵ou want to download and track your expenses. So make a column. What are your expenses you need to actually have the lights on?鈥�
Along with assessing fixed expenses, Thompson also suggested evaluating discretionary spending: 鈥淒o those discretionary expenses actually fit in your lifestyle?鈥�
She recommends reviewing discretionary costs for the last two months, which will lead to a 鈥渃learer idea of how to actually achieve your goals.鈥�
To do this, Thompson suggests creating a categorized spreadsheet that can illuminate the spending habits that digital currency often casts in the dark.
鈥淵ou鈥檇 be surprised of what you鈥檒l actually find when you start to deep dive into it,鈥� she said.
More of Thompson鈥檚 advice includes setting spending boundaries, bookmarking desired purchases for another time, and taking 15 minute grace periods to mull over big buying decisions.
鈥淏e clear about what it is your buying for,鈥� she said.
For more advice from Thompson, watch the video above.
