Mindful Spending and Saving Through COVID-19

Young couple sitting on the couch looking at tablet

People are finding new ways to run errands and complete daily tasks while the COVID-19 emergency orders are in place. Although these are challenging times, quite a few services can be ordered straight to your doorstep. Shopping is still at our fingertips and seemingly more accessible than ever.

For some, this can result in panic shopping or buyer’s remorse. The continuing lack of routine can throw off your finances and leave you ill-prepared for financial emergencies.

How to Plan Your Purchases and Avoid Overspending

Forming a strategy can help you make mindful purchases, steer clear of debt, and add to your savings. To start, you’ll need to create a budget.

Build a Budget

To create a budget, you’ll need to list your income (the money coming in) and all your monthly expenses (the money going out). Generally, these monthly expenditures will fall under one of two categories, necessary expenses and discretionary costs.

Necessary expenses are outgoing costs such as rent or mortgage payments, food, utilities, and other routine bills. Discretionary costs, however, are little luxuries you could potentially live without such as cable, subscription and delivery services, as well as hobbies.

Some of these expenses will be roughly the same amount each month, while others will fluctuate with usage like phone bills and hydro. You may want to over plan for these costs and carry over the remaining budget for months where bills are higher. Don’t forget to budget for miscellaneous expenses that may come on a less frequent basis like property tax, pet grooming, donations, or gifts.

The Financial Consumer Agency of Canada has a great budget planner tool to help you get started.

Track Your Spending

Once you have calculated your budget, you will want to make sure you are following it. There are many great budgeting apps for your computer, phone or tablet, that can help you track your spending. Use your monthly credit or debit card statements and your receipts to track precisely how much you are spending, where you are making purchases, and what you are buying.

Many of these apps will let you know when you are going over budget and can give you reports on a weekly, monthly, or annual basis. Taking these small actions can help you become more financially aware and jump-start your savings.

Plan Your Purchases

Before you go to the store, make a list of what you want and how much each item will cost. That way, you will stay within your budget and avoid picking up extra items or impulse buys. For larger purchases, compare prices through popular online retailers to confirm you are getting the best deal.

If you are choosing to have your groceries delivered, plan your meals in advance to make sure you purchase all the necessary ingredients. Also, place your order with wait times in mind. A little preparation can spare you multiple delivery costs and ensure you have what you need.

Plan Your Method of Payment

Choosing a payment method can be a vital part of controlling your finances. If you have the money to pay off your statement, using a rewards credit card can be very beneficial. These types of cards can earn you cash back or points as you spend. However, carrying a balance can make these purchases more costly as you accrue interest. It may be wiser to choose a debit card or cash if you have trouble spending within your means.

Many financial institutions have increased their “tap limits” in response to the COVID-19 pandemic. This precaution will allow shoppers to make contactless payments and avoid touching pin pads at the store. Check with your credit or debit card provider to see if they have implemented these measures.

Make Conscious Choices

With ongoing uncertainty and more time on your hands, it can be easy to fall victim to mindless online shopping, impulsive purchases, and emotional spending. Making conscious purchases can be hard but can help you avoid buyer’s regret.

First, ask yourself if you need the item. If you are uncertain, remember how difficult it can be to return products right now. If you can’t return or exchange an item, you may end up unhappy and with limited options for getting your money back.

Consider adding the item to your online shopping cart and coming back to it in a few days. You’ll likely get reminder emails if you are a returning customer, sometimes with additional discount codes attached.

If you don’t have this kind of self-control, here are a few tips for making conscious choices:

  • Remove payment details: Delete all saved or auto-fill payment details from your accounts. Finding your wallet and manually typing in your credit card details may give you enough time to reconsider your purchase.
  • Review your cart: Scan your shopping bag for lousy consumer habits. Have you added extra items to reach free-shipping minimums? Did you add clearance or sale items because they were cheap? Are these products ‘final sale’ and can’t be returned?
  • Consider the value: Think about your purchase in “hours spent.” If you make an “X” amount of money per hour, how many hours will you have to work to pay for this purchase? Is it worth it?

Asking yourself these questions doesn’t mean you have to restrict yourself completely. Stick to your budget and treat yourself when you can.

Build Your Savings and Plan for Emergencies

Finding extra money isn’t as simple as checking under the couch cushions like on TV. However, cutting unnecessary costs can put money back in your pocket and help you out in financial emergencies.

Cut Costs

It may be time to take inventory of all your subscriptions and services. How many do you have? Do you use them all? Did you sign up for a free trial and forget to unsubscribe? Cancelling underused subscriptions can be a great way to cut monthly costs.

What about memberships? As a result of social distancing, gyms, studios, and other activity centres were forced to close. If these payments have been paused, you may not have to worry. However, if you keep seeing charges, it may be time to inquire about your options.

Find Extra Funds

Under the current circumstances, many Canadians have found themselves working from home. This situation may mean less gas or transit expenses. Drivers may also be able to take their vehicles off the road and save on car insurance. Look for similar savings and redirect the unused budget into your bank account.

You may be able to find further savings by filing your 2019 taxes and getting a tax refund or applying for applicable benefits. For example, The Ontario Ministry of Education is providing parents with a one-time payment to assist with the costs of educational resources as a result of the school closures.

Nurture Your Savings

If you haven’t already, create a dedicated savings account for your emergency fund. Start by transferring a small stipend into the account each month until you have at least three to six months of wages saved. If you find extra funds, make a lump-sum deposit into the account. This money will prepare you for unforeseen bills, repairs, or costs. When you can, replenish the fund for future financial surprises.

Other savings options may also be of interest if you have money to spare. Although you may be wary of investing during these uncertain economic times, guaranteed investment certificates (GICs) remain a secure way of earning interest on your savings.

Make Mindful Money Decisions

Staying organized and creating a plan can help you focus on not only day-to-day money decisions but future financial needs as well. Think past instant gratification or choices fuelled by anxiety and panic. Come up with a strategy that works for your household and stick to it. By making conscious purchases, you can save money and prepare for financial emergencies.

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