If you would like to know the value of money, go borrow some.
Benjamin Franklin.
When it comes to saving money, spending less is a no-brainer, but even those making every effort to scrimp and save sometimes find themselves making little progress. If this sounds familiar, it may be time to take a step back and look at how, rather than simply how much, you’re spending. Do any of these spending types sound like you? How are you spending your student loan?
The Selective Spender:
The phrase “penny wise, pound foolish” sums up the selective spender. If you know one you may be impressed by their apparent money-saving skills, and they may even think they’re brilliant savers themselves. But don’t be fooled: for every penny they save, they probably blow twice as much on gadgets, clothes or a big night out.
You’re a selective spender if:
1. You’ll skip dinner to be able to afford a top you really want
2. You use the phrase “I can’t afford it” when you can but want to spend your money on something else
3. Your budget for living costs (such as food) is based around the cost of other things you want to buy (such as shoes)
Break the habit:
Only use your main account for essentials and transfer half of any leftover cash into an overdraft-free ‘splurge’ account. By only spending the money available in the new account you will be able to afford guilt-free treats without sacrificing the things you really need and still have some savings left over.
The Impulsive Spender:
Impulsive spenders get a rush each time they hand over their cash. But the initial high is soon replaced by feelings of guilt…so they spend to feel better again! They may go weeks without spending a penny, then suddenly go and spend all their savings at once.
You’re an impulsive spender if:
1. You tell yourself, “I deserve this because…”
2. You feel disappointed when you leave a shop empty-handed
3. You’ve lied to friends and family members about your spending
Break the habit:
If you don’t need it (or particularly want it) and haven’t budgeted for it, it doesn’t matter that it’s on sale; buying something you wouldn’t have otherwise bought will save you nothing. And remember: it may make you feel good initially, but is it worth it if you’ll feel worse later? Try going window shopping and leave your purse or wallet at home – often the rush of just browsing is enough to fulfil any cravings – and put the money you would have spent into a savings pot.
The ‘Just-because’ Spender:
Just-because spenders are perfectly happy without money but still spend any cash they come across. They rarely keep track of their money and buy things they neither need nor want, just because the money’s there.
You’re a ‘just-because’ spender if:
1. Finding you have more money than you thought means it’s time to treat yourself
2. Savings account? You’ve never felt the need to open one
3. You go out to buy milk and come back with a sandwich, chocolate and newspaper
Break the habit:
If you don’t have one already, open a savings account and put any money you don’t need into it. With interest rates so low you may not make much money from it, but you could save a heck of a lot. Chances are you won’t even miss the extra money – and will be happy to see how much you’ve saved when you do need it!
The Optimistic Spender:
Overdrafts, credit cards and loans – they’ve got all they can get, and they’ve probably spent the majority of it too. Optimists live in the present, spending whatever’s available to them and hoping that the future will somehow fix all their debts. Even when running short of cash, they struggle to change their habits.
You’re an optimist if:
1. You choose the more expensive option despite only having £10 left in your account
2. You count gambling among your hobbies
3. You rarely think about whether you can afford something before you buy it
Break the habit:
Budget, budget, budget! Work out a weekly budget in advance and only withdraw that much each week. Is going out every night really worth the long-term debt? And cancel the credit cards; if not being able to make payments on time is costing you more, they’re an easy way to rack up debt fast.
Recognise your money type, identify the habits holding you back, and at last you can be a successful saver. Do tell us what money type you are in the comments box below…
Fancy discussing what kind of money spender you are? Go chat in our student forum!
Money is usually attracted, not pursued.
Jim Rohn.