Overspending is a common problem for many people; it creates debt, anxiety and relationship problems, even among high income earners. All too often, people’s spending habits seem to rise to meet – and exceed – their incomes.
So why does this happen? What compels people to overspend when they already have the items they truly need? The answer lies deep within each person’s spending personality. Recently, I read Dr. April Benson’s book I Shop Therefore I Am, and was fascinated by what the contributing authors uncover about the emotional and psychological factors influencing our buying habits.
I thought it would interesting, and beneficial, to touch on the six key spending personalities they explore: image spenders, bargain hunters, collectors, compulsive shoppers, co-dependent spenders (a.k.a. gift-givers) and bulimic spenders. Continue Reading…
Is the little birdie kicked out of the nest truly “Findependent?”
My latest MoneySense blog posted today carries the curious headline that most Millennials expect to achieve “financial independence” by age 27. I put “air quotes” around the phrase financial independence because of course it’s nonsense that merely leaving the nest and putting fewer demands on the Bank of Mum and Dad constitutes true financial independence.
Keep in mind that the research firm cited in the piece seems to use quite a different definition of Financial Independence than the one used at this site or as formally defined at Wikipedia. For research firm yconic, it seems financial independence means merely leaving the nest and landing a job that pays at least the monthly rent: they are merely “financially independent” of mum and dad.
Even with that loose definition, only 56% of older millennials (aged 30 to 33) say they have “achieved financial independence.”
With these savings rates, true Findependence for many millennials is a pipe dream
It’s just as well they’re using such a loose definition because the way the younger generation spends, it’s going to be a long long time before they achieve the kind of financial independence this blog describes.
To sum up the difference, I’d say “our kind” of Financial Independence is being able to stay afloat financially without the traditional source of single income known as “a job” or full-time employment. It’s quite a leap to go from moving out of the parental nest to being able to survive with neither parents nor an employer to keep those regular financial injections flowing into your bank account.
Far from being findependent, almost half the millennials surveyed (46%) admitted “saving money is a struggle” even if they are able to afford to pay the bills. A third say they are living paycheque to paycheque and are barely making ends meet. Fully 43% still rely on their parents for financial assistance, including 37% who look for help paying their student loans off. Does that sound like “our” kind of financial independence?
Non-saving millennials should find a Government job with a DB pension and stay there
I hate to break it to the non-savers but if they don’t start saving soon, they’ll never be able to achieve true financial independence. They had better be prepared to work until age 67 and be able to live on Social Security (in the US) or on the Canada Pension Plan, Old Age Security and possibly the Guaranteed Income Supplement (GIS), or find a good Defined Benefit pension plan somewhere and hang on to the job for three or four decades. (may as well try the Government first: their DB plans are most likely indexed to inflation and ultimately backstopped by taxpayers).
If there’s hope for them, it’s in the finding that most millennials hope to buy a home at some point. I like that because I always say the foundation of financial independence (our kind, that is) is a paid-for home. But even among those who already own a home, 32% got parental help rustling up the down payment. Among those who don’t, a quarter of them (24%) expect their parents to help them with the down payment.
Parents who have yet to kick the little birdies out of the nest might consider giving them a hint about what true Financial Independence entails by investing US$2.99 or C$3.37 in either of these e-books featured elsewhere on this site. Might make a great stocking stuffer! (Just gift the e-book via Amazon and maybe insert in the stocking a card telling them to check their Kindle).
When Life Bites You in the Wallet, published earlier this year, is an excellent personal finance primer on banking, credit, debt and insolvency, written by a former banker and a bankruptcy trustee.
The bankruptcy trustee, based in British Columbia, is Blair Mantin. The other coauthor is Lee Anne Davies, who I got to know a bit when she worked in Toronto at the senior levels of a major Canadian bank. Lee Anne now lives in British Columbia.
However, in her new career as a health, aging and financial guru, Lee Anne pulls no punches about the wily ways of the industry that once employed her. Continue Reading…
Below we’re pleased to publish the second piece here at the Hub from Sean Cooper, a millennial who really “gets it” when it comes to financial independence. His first contribution was on how he plans to become Findependent, or at least debt and mortgage free, by age 31. The key to this is what the book, Findependence Day, calls “guerrilla frugality.” If the term is new to you, see this primer on the term (as well as “frooger”), which is right below Sean’s article here in the Debt & Frugality section of the Hub.
Sean’s piece is a classic example of guerrilla frugality. Because we all have to eat!
Sean Cooper
Over to the maestro of frugality!:
By Sean Cooper
Special to the Financial Independence Hub
Do you find it challenging to keep your grocery spending on budget? You’re not alone. For most of us, groceries are the second-highest expense after putting a roof over our heads. With temptation down every aisle, it’s easy to let grocery spending spiral out of control.
I’m living proof you can spend less and still enjoy your favourite foods for under $100 a month. I’m able to use the extra money I save towards goals like paying down my mortgage. I know not everyone can live on $100 a month worth of groceries, but maybe my strategies can help reduce your grocery spending a little bit. I’ve found the secret comes down to making wise spending choices.
How I Spend Only $100 a Month on Groceries
Spending $100 a month on groceries is about making specific choices. Instead of going shopping every day, I make a shopping list and go only once a week. Not only does this save time, it helps me avoid impulse purchases. I’ll bring the flyers of other grocers so I can price-match. In a typical shopping week I usually buy only the basics: fruits, vegetables, bread and milk. For under $15 I can get everything I need for the coming week. I’ll only splurge and spend more if I’m running low on something and it’s on sale. For example, if spaghetti sauce is on sale for half price I’ll buy 20 jars — enough to last me until the next sale. As for protein, I stock up on peanut butter and almonds when they’re on sale and never pay full price. I also like to cook for every meal, including breakfast. Instead of buying expensive breakfast cereal, I cook oatmeal. It’s a lot less expensive and more nutritious.
I want to tell you the tale of what I did. I’m not expecting you to become vegetarian, but consider taking a look at some of the changes you can make in your own life.
Evaluate Your Budget
How would you like to buy your everyday grocery items for a lot less? Have you ever considered shopping at discount supermarkets? That’s what I do. The savings can really add up. Shaving $20 off your grocery bill each week will add up to yearly savings of over $1,000. I find discounts grocers often have produce and meat that is just as good in terms of quality as the so-called premium stores. I’m not telling you to stop shopping at your local grocer, but by re-evaluating your budget you can find new ways to save.
Make a Shopping List
To avoid overspending, consider making a shopping list and browsing the flyers for deals on products you’re already planning to buy. I save even more money by price-matching, Many discount grocers match the price of rival stores simply by showing a competitor’s weekly flyer. I show a flyer of the rival grocery store to the cashier and I’m given the lower price. You don’t have to price-match, but just by making a list you’re less likely to overspend.
Consider Cutting Back on Meat
No, that’s not your steak being grilled, it’s your wallet. Sizzling meat prices can really take a bite out of your grocery budget. I’m a vegetarian; instead of eating meat, I get my daily dose of protein from foods like nuts and dairy products. I’m not saying you have to give up strip loin steaks and pork chops, but you might choose to eat meat less often, or buy cuts that are on sale.
Try to Limit Fast Food
I know it can be tempting to pick up fast food on the way home after a long day at the office. We’re all guilty of doing this once in a while. But if you can limit dining out to only once a week, the savings can really add up. By cooking at home instead, you’ll save money and eat healthier, too. Have you ever considered cooking your meals in batches? That’s what I do. I’m not saving you have to give up takeout food, but by eating at home more often you can save a lot.
Consider Buying Items on Sale
If you’re willing to stock up on grocery items you buy every week when they’re on sale, it can add up to big savings. When you see your favourite non-perishable items like canned vegetables and coffee on sale, consider stocking up. By buying enough to tide you over until the next sale you can avoid paying full price. (For some perishables, like meat, and frozen dinners or desserts, a freezer can come in handy if you stock up when the items are on sale: JC.)
Buy in Season
Buying your favourite fruits and vegetables out of season can cost you a bundle. Have you ever seen the price of cherries in January? Yikes! Consider substituting your favourite fruits and vegetables for produce that’s in season. For example, instead of buying watermelons during the winter, I purchase less costly fruits like apples and oranges. If you’re not ready to give up your favourite fruit, you can still save money buying it less frequently – perhaps only once a month instead of every week.
You don’t have to follow my example to the letter, but if you’re willing to make small changes, they can have a big impact on your monthly budget.
Sean Cooper is a Personal Finance Expert and Financial Journalist. He is a first-time homebuyer and landlord who aspires to reach findependence by age 31. Follow him on Twitter @SeanCooperWrite and read his blogs and request his writing services on his website: http://www.seancooperwriter.com/
We’ve heard from several individuals about writing for the Hub and yes, we welcome contributions. Some guest blogs will be going up in the next week or so. Since this site does not charge at this point, we aren’t yet in a position to pay contributors but we are happy to provide what exposure we can. Contributors are welcome to include links where appropriate and of course can end each piece with a short italic description of who they are and how they can be reached.
Because the Hub aims to be a North American portal on financial independence, we welcome contributions from knowledgeable good writers from both the United States and Canada. Remember that the book Findependence Day (which began this whole adventure in 2008) is available in both American and Canadian editions. So are the two new e-books.
The standard length for blogs is often said to be between 400 and 600 words but there’s also evidence that lengthier meatier pieces can get good play and pick-up. Really, it’s a balance between having enough space to be substantial, while recognizing that in this time-starved hectic world we live in, most people have the attention spans of the proverbial gnat. If you run out of steam at 350 words, so be it. And if you need 750 or 900 words to say what you want to say, then go for it.
The longer the piece, the more you need to include subheads and at least a photo or image of some sort. I will act as editor to the extent necessary.
Try to target our six major categories
What topics? Scan the second (gray) bar on the home page to see what we’re focusing on. If you want to reach younger Gen X and Gen Y readers, then Debt & Frugality is the place to target. The category of Wealth Accumulation is very broad and can include anything from asset allocation to pensions to ETFs to robo-advisers (we just put up an item on the latter).
Further along the continuum of Financial Independence, there is the Decumulation section, which is all about drawing down on wealth instead of building it up. And the Longevity & Aging section is a key focus of the Hub because of our belief that the baby boomers and their children are going to be on this planet a very long time on average, assuming they take care of themselves. See the links in this section to the blogs of Change Rangers’ Mark Venning and Agenomics’ Lee Anne Davies.
The Business Ownership category is another important niche. We considered calling this one Boomerpreneurs because so many baby boomers are leaving corporate employment (voluntarily or otherwise) and going out on their own as consultants, freelancers, franchise owners or building entire new businesses from scratch. But of course Entrepreneurship is hardly restricted to the boomers. Most of us stayed in the corporate womb for far too long and might better have embarked on the entrepreneurial path much earlier. Those wishing to pursue “Multiple Streams of Income” (from the Internet or otherwise) may well be building businesses at younger ages, either on top of a full time job or taking the leap direct from college or some starter job that they chuck.
The category of Politics and Economics is very broad. See the initial post there to get a flavour for that. We believe the further you have travelled along the road to Findependence, the more you need to pay attention to geopolitics and macroeconomics. Those interested in this area will find plenty of scope here.
Reviews
The Reviews tab refers chiefly to book reviews, most of which should touch on financial independence in some fashion. As above though, this can include many genres of books: everything from history to biography to entrepreneurship and the Internet. Any book that addresses our main categories will be fair game. And if you’re the author of a book yourself, perhaps a self-published e-book? (we know all about that!). Drop us a line anyway and we can discuss it.
This doesn’t have to be restricted to books. If you love the latest album on iTunes or think a movie is wonderful and want to share it with the world, then give us a try. Of course, we’d be more inclined to run it if it touches in some way on Findependence: a film like The Wolf of Wall Street.
A word on the forums
Another place we’re looking for content is the discussion forums. We have five forums planned to start with and they take a demographic/ages-and-stages approach to the key steps in reaching Financial Independence. Once we have a bit of two-way to and fro between contributors, this may be the place to develop story ideas, ask questions, post links and even subtly promote your business or product, if done in a way that readers are presented with valuable content. They will be moderated but having gone through a long experience with the Wealthy Boomer forums in the past, I think we’ll be able to spot the difference between blatant sales pitches and valuable sharing!
It will be awhile before the forums reach “critical mass.” That’s beyond our control and up to the community. In the meantime, we’re happy to provide the infrastructure.
How to reach Jonathan
First, try jonathan@findependenceday. If I don’t respond quickly it might be that our email system is experiencing a hiccough during this transition between sites. If so, send a DM (Direct Message) to @jonchevreau at Twitter but be sure to @me as well to tell me to check the DM. Like many Twitter users, I can’t be relied upon to monitor DMs unless I’m flagged via the @function. Those who have my actual email are welcome to use it as well: I just don’t want to put it up on the web just yet because of all the spam it may create.
Posted By 
the contributing authors uncover about the emotional and psychological factors influencing our buying habits.
