I want to introduce an idea around how we make our decisions with money. Do you spend and make decisions with now in mind? or do you also have the future in mind too? Groceries is a small scale example of this. Do you buy your toilet paper in bulk when it’s on sale because you know you will always need toilet paper? or do you wait til you run out and then have to pay full price and likely buy a smaller package to do until next time? I was shocked when there was a toilet paper shortage back at the start of the pandemic. I honestly thought that everyone had a spare costco sized package poked in their closets like me. This is a small example, but ultimately this is the difference in proactive, future based, big picture spending vs reactive, survival type spending and there is a very big difference in both the dollars and the mindset between the two approaches.
Groceries and household items are a great way to get started in shifting out of survival, unplanned, winging it thinking and into some forward thought and planning. Take a few minutes and try and anticipate the things you will need for the next bit before you go to the grocery store. If you are regularly having to go to the store because you’ve run out, or even worse you’re going to the corner store and paying near double for some things, there’s huge opportunity to cut the budget overall with some planning and foresight.
Groceries is probably the most regular way that this thinking shows up, but it also shows up in much bigger ways too. When you want a new piece of furniture or the one that you have is wearing out, how do you handle that? Do you save up for a new one? Do you keep an eye on marketplace for what you’d like and wait til you find it? Or do you wait til you can’t stand what you have anymore and then go get a new one on credit? The price you pay and the quality of what you get will be completely different depending on your approach.
Even bigger is vehicles! The idea of saving up for a vehicle is nearly extinct. If your car is getting old and requiring more and more repairs, are you actively planning for how you will replace it? Or will you wait til it kicks the bucket and then go out in urgency and wind up not taking due time to shop around? This is much more than the ten or twenty dollars you can save on toilet paper, this is thousands of dollars, both in the cost of the vehicle itself and then interest.
On the topic of interest, I need to talk about credit scores for just a minute. If a home purchase or vehicle on credit is in your future, one solid way you can prepare is in working on your credit score. The minute I found out I was pregnant I knew I wanted to be a homeowner at some point and immediately got to work on our credit scores. I had the future plan in mind and was making decisions in alignment with that for years before the actual act of building was even an option. Having a solid credit history and score can mean the difference between getting approved or not and also plays a huge role in the interest rate you will pay. On a mortgage that’s not even just thousands, that’s tens of thousands of dollars.
Having an idea of what you want in your future can make such a huge impact on how we make decisions. We all know that making reactive, quick decisions that are forced and urgent is not nearly as good as taking time, putting in thought and moving from a place of vision. You don’t even need to have all the details for this. It can be as small as I know I’m going to want to wipe my butt a month from now so I may as well pay the best price for it now while it’s on sale. It can be as big as I know I want to own a home at some point in my life so I’m going to take whatever small consistent action I can take now to help myself out in the future.
A little planning and foresight can save so much money in the day to day and on the big purchases. Some planning and foresight on your goals can be the difference in achieving them or not, so this is no small idea. See what small ways you can introduce more proactive spending and how you can reduce your reactive spending. It really doesn’t take a whole lot to shift it.
Lots of love
Dawn
Tax Wise 