One of our clients made an interesting comment earlier this week about the benefit of a Financial Plan for imposing fiscal constraints on spending habits.
The spending habits in question belonged to his wife, but could equally apply to either partner in a relationship, or even his own.
Getting a decent handle on your expenditure is an important part of the Financial Planning process.
I thought about this client comment when I saw some new research from GoCompare which found we fritter away an average of £590 a year.
In total, it means we waste £30bn each year on uneaten food, clothes that we never wear, unnecessary household bills and expensive bundled television and broadband deals.
The research found that almost three quarters of us admit to wasting money.
On average, UK adults estimate they waste £49.20 of their monthly spending, which comes to a total of £590.40 each year.
The research highlighted that much of the money people fritter away goes on food and beverages – buying more expensive but convenient, ready-prepared or takeout meals and drinks, or simply overbuying groceries which they end up ditching.
Another key area of unnecessary expenditure people identified was overpaying for goods and services which they do use but fail to hunt around for the best prices for.
Bundled TV, phone and cable services were the top culprit in this category, which also included paying too much for utility bills and home insurance.
Service providers and insurers operate in a competitive market, typically attracting new customers with better deals than they offer to loyal customers – who can find themselves paying well over the odds for the same package.
Commenting on the research, Georgie Frost, head of consumer affairs at GoCompare said:
The research highlights just how quickly a few pounds of unnecessary spending here and there can really add up to a serious amount of cash.
This should be a real wake-up call for the almost three quarters of us who confess to simply throwing money away, as who wouldn’t love a bit of extra cash in their pocket each month?
Wasting money results in taking longer to reach your financial goals and objectives in life.
By cutting out the waste, and by adopting a more mindful approach to spending, you can allocate more of your income towards the things that really matter.
When we work with our clients to develop a comprehensive Financial Plan, often the completion of a detailed expenditure questionnaire results in a moment of enlightenment; where does all of our money go each month?!
Combined with establishing detailed goals that are then supported by the Financial Planning exercise, reviewing your spending habits and applying a little fiscal constraint via the planning process is a great way to get on the right track for the future.
