In today’s environment, it’s so easy to participate in the “get it now, pay for it later” lifestyle that has led to a surge in credit card debt and significant decline in the savings rate for many. This is especially true for many young adults.
The 2008 financial crisis and the current ongoing 2020 pandemic have provided enough evidence that a solid saving plan is crucial to weathering any downturns in employment or market returns. This is also true for college students, many of whom found themselves in financial crunches when they lost part time jobs or when their campus’ closed down and they had to find alternate housing.
Because thousands of Americans are now out of work, including many college students, attaining a college degree is, unfortunately, no longer an option for many. Many students enrolled in colleges and universities last year, may no longer be able to afford the cost of attendance because of a change in their own or their family’s financial situation.
Saving as much money as possible is more critical now than ever especially for students who are being forced to change their living situation because they can’t live in the dorms as planned. A key part of an effective savings strategy is practicing careful, thoughtful spending.
One way to do this is by being”mindful” of how and what you spend your money on. Mindful spending is simply a practice of thinking about what you spend before making the purchase. Begin asking yourself “Can I afford this?” And if you can, ask, “Do I really need this?”
There are a few steps you can take now to begin building the habit of mindful spending:
- Take a screenshot or picture of the item you want to buy and think about it for at least 24 hours before hitting the buy button. The more expensive the item, the longer you should think about it. Consider the cost, upkeep if there is any, depreciation over time (will the item hold its value based on the cost)
- Don’t give into the excitement of the “shiny new thing”. A better strategy is to comparison shop to make sure you are getting the best price. This is even more important when the item is expensive or if you will need to borrow money to pay for it.
- Decide if the item is a “need” or a “want”? If it is a want, can you pay cash for it? If not, you should delay the purchase until you have saved the money you need.
- Call a friend or family member and discuss the purchase with them first? Discuss why you want to buy the item and ask for their honest opinion. Make sure you talk with someone who is also a mindful spender.
- Consider how many hours you would need to work in order to recover the amount you will pay for the item?
- Determine if you will need to use some or all of your savings to make the purchase? Can you afford to use your savings? Are you covered in case of an emergency?
- Set aside some money that you can spend without feeling guilty or regretful. Consider rewarding yourself once in a while, but only if you have the money already saved for a special purchase.
Becoming a mindful spender is not always easy and you might fail sometimes and still make an impulsive buy. But, over time, if you keep at it, you will find that careful, thoughtful spending will become a habit that lasts a lifetime. And it’s a habit that will pay off over and over in the long run.
