Emmotional Spending - A.K.A Retail Therapy

How often have you succumbed to this? What the hell is retail therapy? I feel that it is just another term coined by marketers and advertisers to make us feel as if we can reduce stress and be happier just by spending more money.

I know that most of us work 8 to 10 hours a day, 5 to 6 days a week and all the workload can cause a lot of stress and unhappy feelings. After a hard week at work, we all feel as if we need to reward ourselves. And what better way to do that than to spend, spend and spend. But hold on. Is that you thinking or is that what advertisers and marketers want you to think? We get fed with a whole lot of garbage advertising day in day out. They know best how to lure you in. Words such as pamper yourself, you deserve this, only the best for you etc etc...

Even the best of us are guilty of having done this at least once in their lives. I'm not saying that this is necessarily bad, but please don't overkill and go on a therapy rampage. All you will get is buyers remorse after. It's the guilt after the shopping blood lust wears off. So why substitute one bad feeling for another?

How does your emotions affect the way you spend? Do you spend more or less when you experience certain emotions? Everyone has a different emotional spending habit. As for myself, it goes something like this:

• Sad - Don't Feel like spending a single cent, I kinda retreat into myself and stone.
• Happy - Feel like spending on something nice for someone to let them share my happiness.
• Stressed - Spend on drinks and food.

Before you ask, no, I do not only have those 3 emotions or feelings but those are the most general ones. Once again, don't let your emotions take a toll on your budgeting. Counter this by setting up a bad mood fund - Read more about it here. It is basically a fund set up in a separate saving account to spend without guilt when you are in a mood. The emotion attached is called bad because I assume that most people spend more when they are in a bad mood, hence the need of "therapy".

So, how does your spending habits change in light of different moods and situation? Please share so we can give and receive advice on how to better manage excessive spending. We are all here to help each other out.

As always, save more, spend less and invest wisely.
P.

C'mon, let's get another round of drinks! Dont be boring.

Does the title sound familiar? I'm pretty sure you have heard something like that before. You can substitute the word drinks for shopping, food, hand phone and so on.

You feel pressured to spend and conform when your friends request that of you. Deep inside, you are feeling uneasy as you know that you are eating into your budget and spending way more than you actually should. Yet, to gain social acceptance, you dig deep into your pockets and scrape the dollars off the bottom.

I feel we should always do things in moderation. If you are always saying no to going out and having fun, soon your friends will stop calling. However, if you are always saying yes, you are seriously endangering your savings and retirement planning. The key is always knowing when to say yes, when to say no and when to give a better and less expensive suggestion.

If they are truly your friends, they will definitely hear you out and understand. (But not before making a sport out of you.)

Here are a few less expensive alternatives:

1. Buying beer from the supermarket and head to one of your homes to drink rather than heading to the pub and paying easily 3 times the amount. What i learnt from experience is that it's always the company and not the venue that decides whether it was an awesome night or not.
2. Get everyone to make some food and head to the park or something for a picnic rather than going to a fancy restaurant to eat. You might find that the fresh air and change of environment is extremely welcoming.
3. Buying a dvd from the store and watching it at home instead of going to the cinema to catch a movie. The dvd would cost between  $10 to $25 for all of you instead of approximately $10 per person should you go to the movies. Buy microwavable popcorn to ease in those hardcore movie goers.
4. Instead of going shopping at the mall, why not visit a flea market and have the same amount of satisfaction. You will be surprised and the amount of stuff you can find at a flea market.

The list goes on and on. Just use your imagination and I'm sure you, your friends and family will have as much satisfaction and enjoyment at a fraction of what you would have spent otherwise. Once again, i would like to say this.. It's the company and not the venue or amount spent that matter. If you are with friends and family, even the simplest of food will be a million times more enjoyable that a royal feast with...for absence of a better word, enemies.

As always save more, spend less and invest wisely.
P.

Are you saving enough?

As per the title, do you think that you are stashing away enough money? Are you saving 30%, 20% or nothing at all? Well, it's never too late to start but be warned that the later you start, the longer you have to work and the later you retire.

The amount of your salary that you save per month is directly co related to when you can retire. Let's say you save 25% of your income per month for a year. That would mean that you have a year or retirement saved up ready to be invested after every 4 years.(Presuming you have the same level of expenses after retirement) And if you save 50% of your income, you would have a years worth after 2 years.

An example would better illustrate this. Here are 2 friends, Jon and Mike, both 25 and are commanding the same income of $5000. Jon saves 25% and Mike saves 50%. They both invest their money at a rate of 8% and require $3,500 a month to cover their expenses when they retire.( Higher expenses due to dream of traveling and fulfilling other things they always wanted but did not have time to do)

With the power of higher percentage of savings and the magic of compounding, Mike would achieve retirement at the very young age of 35. Jon on the other hand would have to slog for another 6 years of this life to reach the same level as Mike and retire at the age of 41.

Are you ready to save more now to attain an earlier retirement? Or will you rather enjoy that little bit more now and have to retire later. I choose to save more now and retire earlier. For those with partners who differ in your views of saving versus spending, you can always apply the bad mood fund and adjust slowly to an amount you are both comfortable with. I mean, there is no point in starting your journey with an argument or fight with your special someone when one of the key reasons for early retirement would be to get to spend more time with them.

With this, I leave you to ponder your priorities as you yourself know which path to take best. I wish you wealth and happiness in whichever path you choose.

As always, save more, spend less and invest wisely.
P.

Compromising on differing financial and retirement goals in a relationship

Being married has taught me several things in life. To be patient, go give and seek nothing in return, to always try to find a compromise and most importantly, to always have to work and put in effort into something or someone that means everything to you.

Firstly, i would like to say that like many other couples out there, my relationship consists of a spender (A.K.A the wife) and a saver, me. More often than not, especially after reading books and blogs on being frugal, i would start preaching about the importance of being frugal to my wife, C. Which almost always leads to 3 different scenarios. A hardly convincing agreement, a roll of her eyes plus sneer combo and the worst... the I don't agree to this, we should spend what we earn as a reward conversation.

Through the years i have known her, i have learned to compromise and come up with tweaks to my obsessive saving habits so as to integrate her obsessive spending habits ( 100 Pairs of shoes and counting.."'Retail Therapy" she calls it... ) into my life. One of the very effective methods was the use of the bad mood fund or the B.M.F in short. I can't remember where i read this from but thank you whoever blogged about this.

What is this bad mood fund you might ask? Well, its a simple concept whereby we set aside a sum of money every month and deposit it into a separate savings account. It is left there to accumulate till THAT WOMAN my loving wife feels like spending it -  bad mood or not. This way, she does not feel that she is being restricted or bounded.

I feel that it is extremely important to communicate with your other half to get a feel of their views on both your financial and daily lives. Find out what they think of your views of financial planning and retirement while in turn finding out theirs.

The key is to be comfortable talking to each other about money as it can be an extremely touchy subject. Once you have laid out everything on the table, you can then decide how best to work things out and compromise so that everyone is happy.

I wish you all the best in your financial and daily lives with your loved one/s.

As Always.. Save more, spend less and invest wisely
P.