Make mindful money decisions by tracking your spending, choosing deals wisely, and seeking professional help for debt reduction options.
Q: My partner and I have been trying to consistently monitor our spending for the past few months. We wanted to figure out our expenses better to avoid the credit card debt we accumulated last year. Neither of us had tracked our actual spending before, other than filing receipts and checking that our statements were accurate. We realized that we tend to stock up on items when they’re available for a good price. I think we developed this habit during the pandemic and hadn’t realized its impact on our finances. Looking at our credit card bills, we can’t help but wonder, are we saving in the long run? ~Lara
Recommended Videos
A: Deciding whether to take advantage of a discount or deal is not a one-size-fits-all decision, and one way to determine if it aligns with your long-term best interests is to take a careful look at your spending habits. Tracking your spending can be an eye-opening experience and our credit counsellors recommend that everyone does it periodically. While many people deem it an unpleasant chore, it helps identify spending patterns, pinpoints unnecessary expenses, and reveals whether your current budget aligns with your spending choices.
Tracking is also the basis for building a realistic budget based on your current circumstances, which is especially important if your income, expenses, or goals have changed. When you want to ensure that your spending habits support your goals, tracking where you spend your money can reveal opportunities for savings, highlight triggers for impulse purchases, and show seasonal variations in your spending. Overall, it empowers you with the knowledge to make more informed financial decisions and take control of your finances.
The consequences of buying sale items in bulk
Stockpiling items on sale can seem like a smart financial move, but it can sometimes lead to unintended consequences. Overbuying is a common issue, as sales can tempt you to purchase more than you need, leading to waste, especially if products have expiration dates. Additionally, accumulating large quantities of items requires storage space, which can lead to clutter or the need for additional storage solutions. The excitement of a good deal can cloud your judgment, so it’s important to be mindful of your actual consumption patterns to avoid the trap of overbuying.
Spending large amounts on sale items can tie up your cash flow, leaving you with less money for essential bills, like rent or car payments, and unexpected expenses such as home repairs. While getting a good deal can be satisfying, that money might be better allocated toward immediate needs, emergency savings, or investments that grow over time.
Sales can also lead to impulsive purchases of items you wouldn’t normally buy, resulting in unnecessary spending. Over time, these unplanned purchases can significantly impact your budget. Plus, if you’re buying on credit, interest and fees could cancel out any savings.
While buying discounted items can be advantageous, balance is key. Create a budget that allows for reasonable sale purchases and prioritizes essentials. Keep track of what you have in order to avoid duplicates and waste, so you can enjoy the benefits of discounts without the downsides.
Deal or no deal?
Promotions like two-for-one deals, buy one-get one 50 per cent off, or 60 per cent off clearance sales are marketing tactics designed to encourage consumers to spend more than they normally would. If you’re trying to live on a tight budget, it can be worth ignoring most sales entirely; instead, plan your spending carefully. Just because something is on sale, does not mean it is a good deal — after all, it is only a bargain if you actually need it. To get the best deal, be patient and keep track of an item’s typical cost, noting how much you can save when it goes on sale. This way, you’ll know if it’s worth buying.
When it comes to a save-the-tax offer or the GST/HST holiday, a five per cent savings isn’t much, and waiting for a better deal may be more worthwhile. Plus, the rules for the GST/HST holiday can be confusing. If you try to save money by stocking up but don’t carefully follow the rules, you might end up buying items that aren’t included in the GST/HST holiday, thereby not saving any money. You may feel good about the purchase, but ultimately, you won’t benefit financially. To get the most out of the GST/HST holiday, combine the five per cent savings with a deeper retail discount for items you need and had already planned to buy.
Make an informed decision about a ‘sale’ on debt
The bottom line on choosing deals that work for you
Economic and political uncertainty can have a significant impact on the prices of goods and services. For instance, an increase in tariffs or fluctuations in the value of the Canadian dollar could drive up the cost of imported goods, making the potential relief from decreased inflation short-lived. During uncertain times, establishing your own emergency savings account is crucial. Contributing to this fund regularly provides a financial cushion that can help you weather economic instability. This is far more beneficial than stockpiling items like toothpaste, toilet paper, pasta, or pet supplies, because cash reserves offer flexibility and security. Building a robust emergency fund ensures you’re prepared for unexpected expenses, enabling you to maintain financial stability regardless of market conditions and other circumstances beyond your control.
Related reading: