Tag Archives: Fredica

Money Brain

money brainThere’s “mommy brain,” “senior moments” and “blonde moments.”

Well…now there’s “money brain.”

Experts say being a spender or saver depends on your brain. What you’ve been taught at home has something to do with it too, but in this post, we’re talking about that gray matter between your ears.

Recent research shows that while parents do have an effect on your financial habits, your brain’s chemistry plays a role too.

We won’t bore you with case studies, focus groups and medical gobbledygook, but here’s the deal: some of you get a thrill from instant gratification (buying that super cute pair of shoes NOW) and some of you get excited by “the deal” (think shopping sales or seeing your savings grow).

Think about it: When you get a free meal, doesn’t it taste better? Or if you find those super cute pair of shoes HALF OFF, aren’t they all that much cuter?

If you want to read the research, read The Psychology of Money-How Spending and Saving Habits are Programmed in Your Brain or The New Science Behind Your Spending Addiction.

Now that you know “you can’t help spending” … well, actually, you can…but if you feel you are one of those people like our friend Fredica (who had a spending problem, but now realizes she can control it) here’s some tips:

  • Use cash. The simple act of seeing the dollars can help. A credit card is just a plastic card, right? You can’t see the money being spent until it’s too late (and $300 later).
  • Use an ATM or branch office to withdraw your money, and make sure you get a balance inquiry. This helps you see your dwindling account.
  • Never “put it on my tab.” Pay as you go so you keep track of how much you are spending. Wait…the only place we know of where you say “put it on my tab” is a bar, and you shouldn’t be wasting money there anyway.
  • Don’t be swayed by “the big sale” or sales people! Remember that Friends episode when Joey bought all that stuff for his new apartment and racked up a major credit card bill?

Ross: What… what’s that?
Joey: It’s my VISA bill. “Envelope one of two.” That can’t be good.

No Mr. Tribbiani, it’s not good.

Don’t buy things because they’re on sale. Buy them because they are a need.

  • Know the difference between needs and wants. Read this “Needs vs Wants” from a recent post.
  • We’ve said it before. Tell someone you are trying to control your spending. A good friend will stop you from buying too much. A great friend will buy it for you. JUST KIDDING. Don’t think we want you to be a charity case. A great friend will help you and may even suggest a financial counselor at a credit union or non-profit agency.

No matter if you are a spender or a saver, you brain has a lot to do with your money smarts, as well as the habits you learned early on in your fiscal career. The bottom line is all about control, and we know you can control your brain. Well, most of us can.

Controlling Impulse Spending.

Hot Deal! Best Sale!Impulse spending will wreck your budget faster than the Ellen selfie went viral at the Academy awards.

Impulse spending (or impulse buying) is an unplanned decision to buy a product or service. Stores are notorious for placing items “just so” to increase your impulse spending.

Fredica knows that she is an impulse buyer. She knows she buys things she doesn’t need, just because it might be on sale or she has a coupon. She’s not alone.

The lure of impulse spending.
Did you know 90 percent of the time you go shopping you end up buying something that wasn’t on your list?

Yes, 90 PERCENT!

A survey showed that impulse buyers waste an average of $200 per month on items they don’t need.

But who can resist the lure of temptations like this: “Buy a bag of chips and get a jar of salsa for free.” Neither items are on your list, but hey, free salsa!

Or this: “Buy three 12 packs of soda for $12 OR one for $5.” NO ONE really “needs” soda. But here in ‘Merica, we do!

Retailers know that 88% of impulse buys are made because something is on sale. And 14% of impulse buys are food items, but something you probably didn’t need in the first place.

Impulse spending creates cluttered houses, busts our budget and packs on the pounds.

Plan to shop.
Retailers, especially grocery stores, rely on consumers to make impulse purchases. That’s why it’s super important to PLAN to shop. In fact, impulse buying increases 23% if the trip itself was unplanned!

Make a list and (this is the important part) STICK TO IT.

Planning to shop and sticking to only the items on your list can reduce impulse spending.

Take control.
We know it’s hard to control spending. Here’s our favorite ways to take three tips to help:

Give it 48 hours. If you still need that item, you can go back and get it, but only if it is in your budget. Chances are, you won’t.

Calculate how many hours you have to work to buy that item (really only works for larger purchases).

Go on a spending freeze. A spending freeze is where you don’t spend any money for a designated amount of time. Before you freak out and think you can’t do it, even a few days can help. A two-week spending freeze is common, but some people even try a month. Just Google “spending freeze” and you will find plenty of resources to get started.

Controlling your spending is hard, especially when it looks like everyone else is throwing money around like it’s the greatest thing since sliced bread. The ability to purchase things online doesn’t help either. Click, click, done! Congratulations! You just spent $78 on shoes you don’t need.

Take control now. The only person who can change your behavior is you.

Don’t Be Such a Waste

Wasteful spendingDon’t be such a waste. Wasteful spender that is. Financial experts estimate Americans spend 10%-15% of their income on unnecessary items. (Read: Things you don’t need!) Or things like fees or services charges that are certainly avoidable.

We asked our Money Possible participants what they found they waste money on.

Fredica brings up a common one: cell phone. She says her monthly payment could be lower.

Lisa and Bryan admit wasting money on things like a soda at the gas station, or food and drinks at sporting events.

Fredica, Lisa and Bryan are in good company.

Unnecessary bills, fees, or or simply paying for a service you don’t need is at the top of the “money down the drain” list. So are “extras” at entertainment venues, like popcorn at the movies. At $5 a bag, that’s enough to pop your wallet!

Wasteful spending items can include any or all of the following, and can really add up:

  • Memberships you don’t use (gym, Sam’s club)
  • Late fees (pay your bills on time!)
  • ATM service charges (use your financial institution’s ATM. Credit unions have a network of surcharge free ATMS…7,000 of them! Or at least take out a big chunk of money so you don’t have to use the ATM every week)
  • Services you don’t use (check your bills – don’t use call waiting on your landline anymore? Who does? Get rid of it!)
  • Unlimited data on a mobile device (only text your teenage daughter? Use a limited data plan to save money)
  • Junk food (eat before you go!)

Need more money wasters? How about drinks and dessert when eating out? Those alone can tack on an extra $20 on your restaurant bill…and an extra $4 in tip…so really an extra $25! Sheesh!

Here’s another, and it sounds stupid. But you can waste $100 a year on electronics that are plugged in when not in use. Just don’t pull the plug on that annoying clock that you have to set every time the electricity goes out. It’s not worth it.

And by all means, pay those dang bills on time! Get your act together, organize your household expenses and budget and never pay a late fee. It’s just money down the drain.

Need more?
Yahoo Finance: Ways to Waste Your Money

Budgeting: Not as hard as it looks!

Budgeting: Not as hard as it looksWhy is it that the right thing to do is always the hardest? Like not eating that double fudge chocolate brownie warm from the oven. Like breaking up with that person whose laugh drives you insane and you know it just won’t work out with. But when it comes to budgeting, you can’t use the old ‘it’s me, not you’ excuse.

So why don’t we do it? Is it because we don’t like to see the hard reality staring back at us? Or that it takes a little thought and planning? Whatever the reason, we promise you that making and sticking to a budget isn’t as hard as it looks. (Check out the ‘Basic Money Management’ section of our Money Possible Workbook)

Our participants are well on their way to destroying their debt. But guess what? They all started by making a budget. While some were budget newbies, others had tried before.

Lisa and Bryan said, “We did have a budget before. However, it was hard to stick to when unexpected things would show up.” We know, how can you plan for the unexpected? Having a little cushion in your budget will help keep you on track for the long haul.

Fredica and Raquel never had a structured budget.

Fredica, “just mapped out what was owed and the due date.” That’s a good start, but planning for the future requires long term budgeting and goals.

Raquel’s method was, “to pay with what you have and pay the most important things, rent, utilities, medicines, daycare, etc.  I think the hardest part is trying to find and figure out EVERYTHING that you owe, and what to start with first.” Getting everything down on paper (or the computer) makes your budget tangible. From there, you can begin determining what next steps to take to destroy your debt.

So here are three easy steps to get you started:

  1. Identify how you’re spending your money now.
  2. Evaluate your current spending and set long-term financial goals.
  3. Track your spending monthly and adjust if necessary.

Join our participants and follow along – you, too, can be on your way to destroying your debt. As for your relationship woes, just do it already! It really isn’t you, we promise.

View the television segments.

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