Decrease Spending, Increase Debt Control this New YearDec 20, 2016
Debt control during the holidays can be tricky with Black Friday and Cyber Monday deals now taking over Canadian retailers. This long Black Friday/Cyber Monday weekend alone is expected to increase Canadian consumer spending by 15 per cent. In addition, total holiday spending is expected to increase each household’s debt load by 3 per cent. One way to keep your debt under control during the holiday season is by practicing intentional spending. By doing so, you may be able to spare yourself both buyer’s remorse and unwelcome January bills. But intentional spending — and intentional saving — can also help you avoid debt all year round.
What is intentional spending?
Intentional spending is a way of using your discretionary income only for what brings you the most joy. While intentional spending isn’t necessarily about being frugal, it also isn’t about overspending. Obviously you’ll have financial responsibilities like insurance, utilities, housing, taxes, savings and debt payments that will still require you to stick to a budget. The good news for your budget is that intentional spending is about thinking and planning ahead — spending money with purpose, rather than on impulse.
Here’s a good example of intentional spending. Canadian millennials have driven the shift toward shopping local. They believe the goods they purchase should support local business and economy, which is why 83 per cent of millennials are more likely to shop from domestic online retail websites. Millennials also value what retailers stand for, the impact they leave on the environment, and how much work they do with local charities.
When money is tight, intentional spending can be all about balance. Some people may choose to spend more on exotic foods while shopping at the thrift store for clothes — or choose to spend money on live entertainment and skip the cable connection all together.
How to intentionally save your money
Just as millennials intentionally choose retailers who reflect their values, saving can follow the same sentiment. Look at your current lifestyle and ask yourself:
- What milestones are important to me? Buying a home, starting a family, planning a wedding, renovations and vacations all require savings.
- Am I prepared in an emergency such as illness, divorce, job loss or an accident? An emergency fund should include three to six months of income that is easily accessible.
- What is my time-frame to complete these goals? Do I want to start a family in the next 5 years? Will I need to find a larger home? Referring to the SMART goal approach can help you plan your next steps.
Spending or saving aimlessly can spell disaster. Overspending on gifts, vacations or just about anything will eventually derail your finances. And, saving without a direct goal or target will cause you to lose momentum. Prioritizing the most important things in your life are key.
Intentional debt control
Millennials in Hanover who may still be paying off student debts or consumer credit debt may benefit from another form of intentional financial behaviour: intentional debt control. In conjunction with intentional spending and saving, debt control will be automatic and you can work toward becoming debt free sooner. When you are deliberate with your purchases, you are less likely to overspend and add to debt, and when you make savings a priority, you will have a buffer during unexpected events and be less likely to turn to debt.
Have you practiced intentional spending recently? Share your experiences with others. #BDOdebtrelief #LetsTalkDebt