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Watch out for those little expenses!

In the context of your monthly salary R100 may not be worth an awful lot. However, collectively, the mindless purchase of “little” things could be making you broke.

Mall Madness

How convenient are malls really? And how much unplanned spending do you do there?

  • The grocery store is rarely located at the entrance: it is deep into the heart of the mall. This ensures you are exposed to the maximum number of stores on the way.
  • Ever wondered why in some shopping areas the up escalator is on the opposite end of the floor from the down escalator? It’s to ensure you walk past all the stores.
  • Mall marketers place cheaper impulse-buy stores at the main entrances. If you buy a minor item it will encourage you to keep on spending.
  • You can also be lured by your sense of smell. Have you noticed how the smell of fresh coffee can grab you by the nostrils and before you know it you are eating a R25 muffin and drinking a R20 cup of latte? 

Tried and tested tricks

The supermarket

  • Research reveals that as much as 70% of grocery purchases are unplanned. Supermarkets place the day-to-day essentials in the outer reaches - it increases the chance of impulse buys on the way. A particularly annoying tactic is to relocate popular items in the store so you are forced to go walkabout.
  • Frustratingly placed displays are not bad organisation: you are supposed to bottleneck at alluring displays.
  • Immunise yourself against supermarket tactics: make a list and stick to it. Watch out for so-called deals. Usually only the most expensive items are marked down: R1 off premium coffee is not a deal when its starting price is R20 higher.

Bars and restaurants

  • When was the last time you were in a bar with soft music? Loud music is there for a reason: to stop you talking, because people in deep conversation don’t drink as much.
  • You become less aware of what you are paying as the alcohol takes effect. Stick to your plan for one or two drinks and then move on.
  • Starters can really add to the bill. By all means go there if you really want to but – well, you don’t do three courses at home, do you?

Watch your spend

  • Keep note of what you spend over a month. Keep a notebook with you at all times, and use it to jot down the details if you buy an item for which you don’t get a receipt.
  • Retain all of your receipts and separate them into two categories: ‘essential buys’  and ‘impulse buys’. Bread and milk is necessary, a bag of chips is not.
  • Add up the receipts and book entries of those impulse buys to see how much is spent on unnecessary purchases, and distinguish between real essentials and luxury buys. Pre-packed, cut and cooked foods can cost up to 50% more than unprocessed products, for instance.
  • We often overlook monthly debit orders. Many people pay for services they no longer use because they do not notice the small amounts being deducted from their accounts. Cancel subscriptions and services you no longer use.

"Wretched excess is an unfortunate human trait that turns a perfectly good idea such as Christmas into a frenzy of last-minute shopping.” - Jon Anderson


Review your insurance and investment policies.

Many people gather investment and insurance policies over the years with no clue about how relevant they remain. All of these policies attract administrations fees so it is silly to have four or five policies when you can have one that will do an equal or better job, but first understand the cost of terminating a policy early.
 
Did you know?

It’s important to go through your investments and risk insurance policies every year or when a major lifestyle change takes place like a divorce, marriage, death, birth or retrenchment.
 

 

Published with permission from www.liberty.co.za

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