Planning ahead every time you spend

Many of us, by just seeing the title of today’s topic, we are saying ‘Your life must be boring if you have to plan ahead every time you spend’. You see, the big problem with that thinking is that it makes an incredibly false substitution. Planning ahead does not mean the elimination of impulse buying in life. Agreed, there are some expenditures you make on the spot because they offer gains which may hardly be found again if missed at that point. But it is also true that unplanned impulse buying has got so many people in deep spending trouble.

I have a habit. A habit many would find either useful or funny. I make effort to only have K1 000 in my wallet each day unless I know I have something planned in advance to buy. The K1 000 (about $2.50) is enough to buy newspapers and any incidentals like phone credit should I run out – the money is enough for the day – after all, I go home to eat during lunch as I drop my children.

This habit has helped me avoid unnecessary expenditures on numerous occasions. There are times I am tempted to join colleagues for lunch or a drink but I can’t because I don’t have enough money on me – and I don’t want to be a parasite on them. So my outings and lunch-outs are really planned. There are times I see a very nice DVD, but I can’t go for it because the money on me is not enough. Well, sounds tough life, or does it not? But I can comfortably tell you that the little savings made in practising this habit has over time contributed immensely to the positive balances on my investment account – not my bank account of course because I am an investor and would never leave my deposits just idling in a bank account earning meager four percent interest rates.

Admittedly, it’s easy to apply the principle of planning ahead every time you spend for the big purchases. For most of us, saving and planning for houses and cars and holidays is completely normal and reasonable behaviour. We don’t want to go on a holiday that costs thousands of kwachas without some planning and we certainly see the logic in planning for such purchases. Where the challenge begins for many of us is when the purchases get smaller. Wedding and seasonal gifts, for example, are often bought without much planning, even though you can often find better gifts for the same price or better deals on the gifts you bought with just a bit of window-shopping and planning. These things add up—the ten minutes spent planning for such a purchase might net you K5 000 (about $12.50) in savings, which is well worth it for many people.

My suggestion is simple, each day or month, put aside a certain amount in cash in your wallet and let that be your ‘planned’ impulse money for the day or month. You can do whatever you want with it and it’s fine because you planned for that amount. When that money is gone, it’s gone. But it’s no big deal – just wait until the next day or month so you can re-stock your wallet.

Obviously, you can adjust that amount to whatever you would like – more in some situations, less in others. The reason for doing it is simple: it allows you space to occasionally spend impulsively without being destructively chaotic with your finances.

Have a blessed day as you resolve to plan ahead every time you spend.