Money expert offers advice on avoiding overspending this season

As spring shifts into summer, seasonal spending habits can take a toll on your savings. But one personal finance expert offers advice on how to avoid overspending this year.

“People are coming out of their houses, socializing, starting to be out in the world,” money expert Robyn Thompson told CTV’s Your Morning on Tuesday. “When they do that, often you have a ‘freshen-up’ of (your) wardrobe. You have a ‘freshen-up’ of some items in the house, and you start to spend some money on things that make you feel great.” 

Thompson explained that the added pressure of social media can trap us in a cycle of spending desires that are difficult to dismiss.

“We live in an influence culture, so we start to see on our feeds everything that people are spending money on, buying, doing, all their experiences, and that could cause a bit of insecurity in our own life, psychologically,” she said.

“(Fear of missing out) is rampant in our culture. So it’s really about getting an understanding of how we’re spending money, what it looks like, and does it support our longer term goals?”

Thompson pointed out that behavioural research has shown more discomfort in consumers “shelling out hard cash” than those using other ways to pay, such as debit or credit cards.

“We live in a digital currency,” she said, explaining that this could lead to more impulsive spending that clears the way to “increased debt and reduced savings.”

Thompson suggests combatting this through maintaining further transparency with monthly expenses.

“You want to take a look at your spending,” she said. “You want to download and track your expenses. So make a column. What are your expenses you need to actually have the lights on?”

Along with assessing fixed expenses, Thompson also suggested evaluating discretionary spending: “Do those discretionary expenses actually fit in your lifestyle?”

She recommends reviewing discretionary costs for the last two months, which will lead to a “clearer idea of how to actually achieve your goals.”

To do this, Thompson suggests creating a categorized spreadsheet that can illuminate the spending habits that digital currency often casts in the dark.

“You’d be surprised of what you’ll actually find when you start to deep dive into it,” she said.

More of Thompson’s advice includes setting spending boundaries, bookmarking desired purchases for another time, and taking 15 minute grace periods to mull over big buying decisions.

“Be clear about what it is your buying for,” she said.

For more advice from Thompson, watch the video above.