Could a financial diet be just what we need to curb excess spending? Following on from our first blog, we look at more popular diet plans and give them the financial spin.
80/20
The 80/20 approach has gained popularity as a sustainable approach to eating. The idea is that we eat more mindfully 80% of the week and allow ourselves a more indulgent approach the other 20%. Many people prefer this method as the thought of a pub lunch on a Saturday or Sunday fry up spurs them through the rest of the week’s more restrictive approach. This approach could work well for those who enjoy a treat. You could adapt this ‘diet’ in one of two ways. One approach is to completely restrict your surplus spending 80% of the time and allow yourself a one off purchase during the week. We’re not talking a Saturday spending splurge because, just like dieting, this risks undoing all your hard work during the week. Instead, picking one item to spend on, be that a physical item or an event, may help focus your mind and spending habits. Alternatively, another approach is to take your disposal income (that’s the money left after all essential bills etc have been paid) and splitting it 80:20. The 80% should be saved or invested towards your long term financial and life goals and the remaining 20% can be yours to spend as you wish.
Points
The diet club approach has been popular for decades now. Many of the plans rest on the concept of points or syns (synergy points). Participants are allocated a certain amount of points each day to spend on food of their choice. Once these points are used up they’re gone. Followers of the plan are discouraged to take points from one day to the next. Spending wise, this is essentially budgeting. Allocating yourself a daily budget means you are more in control of your spending. Like the diet plan, we’d strongly recommend sticking to your daily allowance and refrain from ‘borrowing’ funds from the next days allowance. This approach ensures you are less likely to overspend and makes you count your spending daily.
There we have it- the diet plan approach to spending and saving. Just like all diets, each one will work better for different people. This is just intended as a light and humorous guide but hopefully we all will take something from it. By refocusing our spending habits and being a bit more mindful of those surplus expenditures we could all free up some extra money that could be better invested in realising our long-term goals.
If this article has got you thinking about your finances, get in touch. We’d love to hear from you!