Habit Spending: What it is and Why It's Making You Broke
Habit spending: what on earth is that?
Oh, I’m so glad you asked.
Basically, I’ve found you a loophole for that pair of shoes you’ve been eyeing up. As it turns out, buying that oh-so-gorge pair of shoes may be better for your finances than your ‘habit spending’.
Habit spending – a term coined by moi in June of 2018 – is what I mean by those everyday, incidental purchases. For me, it’s things like takeout coffee, raw food bars and those times when I pop into the supermarket for ‘a few essentials’ and leave with a kilo of powdered gold that for some reason I’ve convinced myself will revolutionise my morning smoothie.
For you, it could be cigarettes, that 3pm choccie fix, an after-work wine or maybe even an overpriced fitness class that you could definitely swap out for a bit of old school Zumba.
The danger of habit spending is that the amount is often so small, we don’t think it’ll have any effect on our savings goals. I’ll think twice about buying a top from Kookai for $85 because it’s an upfront expense, but happily trot off to my local coffee shop each morning and slam down $5 for an almond capp with a little biscuit on top.
If you could alter your ‘habit spending’, you could indulge more freely in those larger purchases.
Grab your finance bibles! It’s time for an exercise.
Think back to the week that’s just passed and write down the things that you’ve purchased more than once – or if your memory is as shit as mine, you can fill this in throughout the week.
My week of habit spending:
Almond capp each day - $5 (week total approx $35)
Kombucha on Monday, Friday and Saturday afternoons - $4 each (week total approx $12)
Deliveroo from forgotten lunch (usually once a week) - approx $20
So, if I gave up my daily coffee for 2 weeks, or made it at home on alternate days for a month, I’d free up $70.
If I banned Kombucha for 2 weeks, I’d free up that $24 – that’s 2 cocktails at happy hour!
If I stocked up my work cupboard with emergency supplies for forgotten lunch days, I’d free up $80 a month to spend on food out that I actually want, rather than ordering in because I was too lazy to remember to bring my own food.
What have we learned today, Gen Bs? By taking a closer look at our small spends, we can free up cash for those bigger buys – like Kookai tops and cocktails with fairy floss hanging out the top. You know, the essentials.