If there is one thing we need rehab for, it's spending money. Between shopping and take-out, we know our daily spending habits need to be revamped. Since we're sure we're not the only ones who need help, we enlisted Alison Griffiths to teach us how to be smarter when it comes to spending.
What is the best thing to eliminate from your daily budget that will save you big money in the end?
For most people, there is no one big thing that can be cut. But careful pruning here and there can chop 10-15% from discretionary spending on things like groceries, entertainment, restaurant and take out, clothing and even gas.
There are other places you might not think of to reduce the monthly outflow. Check out your payroll deductions. It may be that you can reduce the amount of income tax withheld at source. Your HR department can review it for you.
Insurance is another area where we overspend. Many people pay for overdraft protection and unnecessary extended warranties as well as excessive auto and home insurance. Increase your deductible and make sure you aren't paying for expensive collision on an older car. And if you had to take out mortgage insurance because you had a low down payment, it may be you can eliminate it if you have made sufficient payments to increase your equity in your home.
Focus on the little things because they really do add up.
How can you make credit cards work for you, instead of you working for them?
Think about the power of one! Limit yourself to one credit card attached to one loyalty\reward miles and use it religiously to pay for everyday things such as gas and groceries. Then (and here's the key) treat the balance just as you would a utility or phone bill. In other words, pay it off every month.
At the same time, be a savvy shopper and loyal to the stores that honour the reward miles credit card. This way you can double and triple dip on bonus points. Finally, don't forget to shop online. AirMiles online shopping partners such as Sephora, Chapters, Office Depot and others, offer reward miles that you can't get elsewhere.
You know we love to shop. Any tips you can give us?
I love to shop too but I also love the 24 Hour Rule. Set aside non-essential items like clothes, home décor and electronics for 24 hours, then go home and think about it. Chances are the next day you will have decided you don't really need it, don't have anything to go with it, have something else that is still working and, perhaps, don't even want it.
This small amount of discipline takes the emotion and impulse out of shopping. Not only will you save money but you will also free yourself from the inevitable buyer's remorse which afflicts so many shopaholics.
Alison Griffiths is an award winning financial journalist, bestselling author and experienced broadcaster. Currently she hosts two acclaimed television shows Maxed Out for W Network and Dollars and Sense for Viva. Alison also writes the popular Me and My Money column in the Toronto Star.
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