This festive season, many of us may be guilty of spending without thinking, however, if you never pay attention to the money you are spending it can soon lead to real financial problems. That is why you should not surprise yourself with your expenses during this Christmas.
“Thoughtless spending contributes to financial problems,” says Hannah Annobil-Acquah, Head of Retail Banking at First National Bank. “If consumers don’t know what they have spent their money on at the end of the month, it is very unlikely that they are making positive and planned financial decisions.”
Ask yourself these simple questions and save yourself from some thoughtless spending this festive season.
How much is in my account right now?
Ask yourself – how much is in your current bank account, savings account and credit card? Then consider your outstanding obligations on your home loan, personal loan and hire-purchase. Most people should have a good idea of these balances.
“If you have no idea what is going on with your bank account, this a sure sign that you are not on top of your finances,” says Annobil-Acquah.
Do I look at the price tag during shopping?
How often do you actually study the price tag on the item you are buying?
According to an online survey, 6% of respondents never check the price tag of an item when they make purchases and 30% sometimes check while 64% always check.
Checking the price shouldn’t just be for big ticket items but also for every other thing, including the drinks, cakes, sweeties, foodstuff, cooking oil, dresses and gift items for friends and loved ones during the yuletide.
“Taking note of an item’s price habitually will ensure that you are aware when the price has gone up, if there are any deals on similar consumables or if you can go without that purchase just this once. Checking the price of every item you purchase only takes a few seconds but can make a real impact on your spending at the end of the month” says Annobil-Acquah.
Am I buying items I should be saving for?
It is natural to get excited for purchases such as a new couch for your home, or the latest TV, but unfortunately this is when many people throw caution to the wind, forgetting that financial planning goes with it, Annobil- Acquah said.
For example, if you buy a couch for 10,000 cedis on credit, with an interest rate of 20% and take a year to pay it off. The very same couch will cost you 12,000 excluding additional charges. However, if you save 2,000 cedis a month for five months, you will be able to purchase it without incurring debt.
“Saving for an item will not only be cheaper but will also give you the time to shop around for a great deal, which will likely leave you with extra cash to put away for a rainy day,” says Hannah Annobil-Acquah.
Am I spending without actually purchasing?
Spending without thinking is not limited to actual purchases, but other behaviors we may not be aware of. Consider such actions that could be motivated by the season: racking up banking fees because you withdraw cash often, spending hours surfing the internet or playing movies online, leaving lights and electronic gadgets on all day or giving gifts of cash and kind.
Paying attention to how and what you spend your money on from now until the first week of next year is as important as setting the stage for your continued financial freedom.
Wishing every Ghanaian a Merry Christmas and prosperous new year!!!
Credit: Hannah Annobil-Acquah, Head of Retail Banking at First National Bank