“To Spend or Not to Spend…... that’s The Question!”

How many times have this question crossed our minds? Almost every time when we take money out of pockets, right? Have a day passed by without us having spent a single cent? Unlikely! The question is not whether to spend or not but rather, How Do We Control Our Spending Habits. Below are some smart spending habits to adopt in order to be financially healthy.

Spend According to Budget

There is a Malay proverb that says “ukur baju di badan sendiri” that we should measure our clothes on our own shoulders. This is the equivalent of saying that we should spend according to our budget. We have already covered the topic on Budgeting in our previous article and to reiterate it: Budgeting is really a plan for us to spend without feeling guilty about it later. What is important here is that we need to have a “Spending Plan” in the first place. Without it, we would most likely be spending on impulse or what is commonly known as Impulse Buying. We can’t avoid impulse buying totally and it’s not wrong. There would be times when we just can’t resist that aroma flowing from that cup of Cappuccino or that pair of shoes or handbag which is on sale! However, when it becomes the norm rather than the exception, we have to be wary of our spending habit.

In preparing your Spending Plan, you should also learn to anticipate your needs. For example, if we are going to get ourselves new clothes for the coming festive season, get it earlier during the Mega Sale or whenever a good bargain comes our way (for example, during a warehouse sale or closing down sale). If we were to buy an umbrella each time it starts raining, we not only end up with too many umbrellas but may have to pay a premium for it. It is also advisable to budget for unexpected expenses like wedding angpows, car repairs, home repairs etc. These items, if not provided for, may throw us off-budget!

Compare Prices

Do we make it a habit to shop around before buying something or do we just buy it? Some of us might argue that the time and cost of shopping around before buying a bottle of cooking oil or a tube of toothpaste may not be worth it. True and that is why we have to be a Smart Consumer – we should plan our purchases and have a record of prices of these essential items. Here, we could devise our very own “Price Book” to record down the prices of the items that we buy regularly and know exactly where and when we could get the best deal!

For example, if Store A has the lowest prices for most of the items in our shopping list during weekdays, then we should plan our grocery shopping during the weekday there. However, if Store B has the best bargains during the weekends and we are only free during the weekends, we should go there instead. The point is – have a Shopping List, a Price Book and Stick to them. In fact, we can make this entire process a fun family activity by getting our children help in doing a “price survey” each time they go shopping. Each family member can then compare notes to see who can find the best bargain in town! This would not only help us in comparing prices but also teach our children the value of money.

Branded Stuff

What’s in a Name? Everything and it may be worth more than the product itself and as consumers, we tend to buy the brands that we trust the most. This is well and fine but when we end up buying things that we don’t need or can’t afford, it becomes a problem. Some of us buy branded stuff because we are influenced by the images conjured and emotional appeal created by the advertisement itself and not because we need it. As a Smart Consumer, we have to sometimes look beyond the brand and ask ourselves: “Do I really need it?”, “is it really worth that much?” and “Can I really afford it?” Don’t make purchases based on images or even what your friends have but rather on your needs and the merits of the product itself.

Buying Second-Hand Items

The thought of buying second-hand items might put some people off but this is a great way to stretch your Ringgit. The greatest benefit of doing so is to allow the first buyer to take the initial depreciation of the goods, which is normally the largest. Take for example of buying a brand new car. Most of the time, the new car owner would suffer between 10-20% depreciation of the value of his new car the moment he drives it out of the showroom! If he sells it after 3 years, he may sell it for two-thirds of the initial purchase price, if he is lucky! Imagine if you’d bought it from him… it’s like getting a “discount”. Yes, you may not get that “new smell” of a car but does it really matter? It may be worth the sacrifice as long as the car is well-maintained, accident-free and heavily discounted, don’t you think so?

Another good example of products that we may not want to buy it new is baby products, especially clothing and toys. Some of us might cringe at that idea but it is not uncommon. Baby clothing is not cheap and your baby will most likely wear for short period of time as the baby will outgrow the clothing very fast. Ideally, we could get hand-me-downs for free by dropping a hint here and there. Otherwise, we could either borrow or buy them second-hand from parents who will no longer need them anymore.

Buying Second-Hand items can also include new items sold at a fraction of their original price because of product defects, factory overruns and clearance of old stocks. Unless you are a celebrity or some very important public figure, you do not need to be spotted with the latest fashion or newest model of mobile phones, watches etc. If we do not mind the slight defects or it being a slightly older model, there are bounds of opportunities to grab a good bargain. There are numerous places to consider when buying these items, including warehouse sales, factory outlets, garage sales, junk stores and the flea markets. The process of bargaining can be quite fun and you will certainly sharpen your bargaining skills over time!

The Sleep Test

Shopping can be an addiction and is never easy to resist. We all know the symptoms when the buying bug bites… we feel the adrenalin rush that makes our hearts desire for it; then it goes right up our head and we start rationalizing about it. We tell ourselves that since we worked so hard, we truly deserve it and want to reward ourselves JUST THIS ONCE! Finally, it triggers our hands to dig into our pockets and out comes the “Plastic Card” – CHARGE IT!

Our will may be strong but our flesh is weak! After all, we are only humans, right? However, one effective way to counter this is through “sleeping over it”. This will be especially useful for big-ticket items like buying a new car, changing that old furniture set, renovating our home, buying that plasma/ LCD TV or even that home-theatre system or whatever else we are considering. Before committing ourselves to these items, sleep over it and take a closer look at our budget to see if the purchase fits into your current plan. Discuss it over with your spouse or family and take all the time you need to think it through carefully because once the money is gone, it’s gone!

Remember: When making your next purchase, ask yourself these questions: “Do I really NEED it?”, “Is it within my Budget?” “Is it the Best Deal?” “Can I find a cheaper Brand with the same value?” “Can I find a Second-Hand item instead?”

Be a Smart Consumer and let’s “Make Prudent Financial Management A Way of Life” today!

“Make Prudent Financial Management A Way of Life” today!

From....Agensi Kaunseling Pengurusan Kewangan