Resisting the temptation to purchase
By ADRIAN HUGHES
General manager Westpac Fiji
It’s so easy to be tempted to purchase the things we love, isn’t it?
It seems everywhere we go, new products and services call out from online stores and shopping centres, pleading with us to part with a small amount of money in return for the giddy happiness of owning something new.
There’s no doubt that it’s fun to occasionally purchase new things. But there’s a downside to it, too.
Failing to exercise control over our everyday spending can end up compromising our budgets and jeopardising our ability to save towards our bigger goals.
That means the car or holiday we’ve always wanted fades further into the distance and our financial goals become out of reach!
It’s no surprise, then, that developing good spending habits means being able to stick to our budget, regardless of the temptations that intrude. But how can we achieve this?
The first step is to know the difference between what we need and what we want. A need is a necessary product or service such as food, basic clothing or a utility like water and electricity.
Meanwhile, a want is anything non-essential, like the latest mobile phone, magazine or item of jewellery, or even a food luxury like a takeaway coffee, if coffee could be consumed at home instead.
It goes without saying that your needs should take significant priority over your wants because it’s more important to cover the basics of food, clothing and shelter before spending money on other things like entertainment or new appliances.
But it can be hard to restrain ourselves in everyday life when temptations come our way, so it’s critical that we separate our needs from wants and make room for them both in our budget.
So, next time you’re creating a budget for your spending – and I encourage you to do this regularly- simply subtract all our ‘needs’ from your income over a certain period – a week, a fortnight or a month.
Once you’ve done this, you should have money left over.
Simply split this left over money into the amount you’d like to save towards future goals such as a house or a holiday; and the amount you’d like to put aside short-term ‘wants’, such as a nice dinner out, an appliance or a watch.
By following this simple practice, you’ll ensure you always have money left over for ‘wants’ – entertainment and other non-essentials – while still getting all your ‘needs’ met and still saving towards your bigger, longer term goals!
That’s a win-win in everyone’s book.
Thank you and I look forward to our next Financial Fitness instalment in June!