Make small changes to save big money

While managing everyday spending is clearly important, controlling impulse purchases and stopping automatic payments for services you no longer use can save you even more.

To manage your money well, it is worth pausing before you buy and watching what you pay.

It is easy to get caught up in impulse spending, buying things that you don't really need on the spur of the moment.

Whether it is a sale you see advertised or the stylish clothes in a shop window as you walk by, or a deal online, there are plenty of things tempting you from every place and space.

Events such as the Great Singapore Sale (GSS) can make impulse spending even harder to resist. "Deals, steals and more", the GSS website proclaims. "Unbelievable bargains await you – your wallet will thank you for it."

The difficulty is that these short-term impulse buys may mean missing out on the really important things you want for the long run, such as education or buying a house.

And the money adds up.

While data is scarce here, a survey by research agency OnePoll in the United States found that Americans spend about US$450 (about S$600) impulsively every month, for a total of US$5,400 a year and US$324,000 over their lifetimes.

The biggest reason for snap-decision purchases was that there was a deal on a product.

PLAN, LIST, WAIT

Curbing your impulses can put you on the path towards achieving goals that matter.

Three steps are especially important for spending wisely.

First, prepare a budget that includes your income and expenses. Your budget will tell you whether you have any extra money to spend at all.

Apps such as Seedly or OCBC Bank's Money In$ights can help with budgeting.

Next, and only if you have enough money, make a list of what you need to buy.

While the list does not need to be as specific as a light blue shirt or a 28cm frying pan, figure out what you truly need and how much to spend before you start shopping or go anywhere near a sale. Then, don't deviate from your list.

Finally, if you find something you want, wait a day before you buy it.

Yes, you might miss out on a sale. Realise, though, that retailers use tactics such as having signs saying "Last Chance to Buy" or placing items within easy reach at the front of the store to get you to buy something.

Whether the item seems cheap because it is only a few dollars or is a deal on a large purchase, ask yourself whether you really need it or simply want it because it is on sale.

Slowing down and buying the next day will help you make sure you're buying for the right reason. The temptation to buy may even fade if you can pull yourself away.

Making these changes doesn't mean that you need to stop spending. Just do it differently.

Money can buy happiness if we spend it in the right ways, such as buying experiences rather than things and spending on other people, writer Kira Newman from UC Berkeley's Greater Good Science Center found. The biggest happiness bang for your buck comes from indulging in small treats rather than a few big splurges.

UNNECESSARY WASTE OF MONEY

Equally as harmful as impulse purchases, or perhaps even worse, is getting careless and paying for things you no longer use.

These include that subscription for movies you no longer watch, or that mobile broadband service you no longer use. Or something else.

Again, three steps can help you spend wisely.

First, track all of your spending for a month. Record every item on your bank statements and keep track of what you spend in cash. Write it down on paper, too.

While keeping track electronically may be easier, there is something about seeing it on paper that has more impact.

Then, use that information to understand your cash flow. Look at your spending and use it to catch where you may be paying for things that you don't use or don't need.

Finally, use that information to decide creatively how to cut out at least one item, or perhaps more, out of your monthly bills.

If you find payments for things you don't use, stop them. Or if there are expenses for phone or utility bills that you have had for a long time that are cheaper somewhere else, consider changing service providers.

The clearer you are about the goals you want to achieve, the easier it is to make spending choices that you will be happy with in the long term.

You can also go back to the budget you created to find what New York Times editor Tim Herrera calls income leaks — those habits that you don't think about that can drain your bank account — and plug the leaks to save more money.

While it may be hard to imagine that impulse buying and complacency about everyday spending can add up to so much, the costs can be high.

Taking simple actions to review your expenses and spending less on sales while also automating your savings can make a tremendous difference. These simple strategies for managing spending well can help in achieving your goals without changing your lifestyle much at all.