We now live in a World with competing interests.
Firstly, where we are being encouraged to spend our money and live for today with less friction to spend money than ever.
But then by contrast at the same time we are being encouraged to save for our own future to ensure that we both become financially self-sufficient and then maintain it without the need for government support.
This could be on a micro level about small but impulsive purchases, or rather large capital commitments that eat into what you have already got accumulated.
Navigating this can be difficult for most people and so rather than just leaving you to try and steer this course alone, I thought I could provide some ideas that might help.
Here are my 5 ideas:
1. Counting to 10 – this is a technique that I use with the children when they are in a rage that they cannot get out of. By allowing some time to think about whether a purchase or activity is a want or a need and whether this is realistically affordable can be really helpful. For small purchases that could be 10 seconds, and for larger ones 10 days.
2. Create friction – It wasn’t that long ago when people needed to go into the branch of their bank or to pay by cheque, whereas now we can access most things via our mobile phones. If you are one of the people who is prone to making impulsive purchases then you need to create some friction – you can do this by deleting the apps, not saving your payment details with providers or changing daily spending limits.
3. Having a ‘fun fund’ – rather than trying to be too controlled and restrictive with all of your money, why not just create a separate fund to allow for some level of impulse and spontaneity. This works by making regular payments into a separate account and then enjoy spending on ‘fun’ things in life guilt free.
4. Automated/regular payments for saving/investing for the future – this one is almost a no-brainer. If you are already making regular downpayments for your future self and have all of your regular bills and payments being made on ‘autopilot’ mode, then this gives you the freedom for the rest of the time to spend in a way that enables you to enjoy life.
5. Ask your adviser! – If in doubt about making a purchase or the way that you are operating your expenditure, feel free to ask away. This is something that we come across and deal with regularly. There are really two main benefits of this – being able to talk it through with someone who isn’t emotionally invested, and someone who has an understanding of how the short term may impact upon your finances in the long term. You will have to trust me when I say that whatever you are consider is not the silliest thing I have come across!
So there you have it, 5 ideas to help navigate ‘living for today’ with ‘planning for tomorrow’.
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