Spending Wisely

Imagine your income is like a pizza. "Living within your means" simply means not eating more pizza slices than you actually have! In money terms, it means spending less money than you receive (your income).

Why is this the golden rule?

• It prevents you from getting into debt (owing money you can't easily pay back).
• It allows you to save money for your future goals (remember those?).
• It reduces stress! Knowing you have enough money for your needs is a great feeling.

Spending exactly what you earn leaves no room for unexpected things, and spending more than you earn is a recipe for financial trouble.

We talked about needs and wants in Financial Basics. When you're about to buy something, especially if you're unsure, ask yourself this key question: "Can I survive and be healthy without this item?"

• If the answer is "No" (like for basic food, essential medicine, school uniform), it's likely a need.
• If the answer is "Yes" (like for a new video game, fancy shoes, the latest gadget), it's likely a want.

This simple question helps cut through the noise of advertising or what friends have. It helps you focus your spending on what truly matters first.

See something cool but expensive? A new phone, a gaming console, a trendy jacket? Hold on! Before you splash the cash (or ask your parents to), pause and think:

1. Can I actually afford this? Does it fit within my income or savings without causing problems?
2. Do I really, truly NEED this, or just want it? (Use the question from Subtopic 2!)
3. Have I planned for this? Is it something I've been saving for, or is it an impulse buy?

Thinking about affordability and genuine need helps you avoid "buyer's remorse" – that feeling of regret after buying something you shouldn't have.

Who doesn't love a good deal? "50% Off!", "Buy One Get One Free!", "Limited Time Offer!" Sales and discounts can be great, BUT they can also trick you into buying things you don't need.

Before jumping on a sale:

• Ask the Need/Want Question AGAIN! A discount doesn't turn a want into a need.
• Is it something you were planning to buy anyway? If yes, great! You save money.
• Is the discount actually good? Compare the sale price to the original price or prices elsewhere.

A discount on something you don't need isn't saving money – it's still spending money!

It's easy to spend more than you intended. Here are some ways to stay in control:

• Set a Spending Limit (Budget!): Before you go shopping or browse online, decide exactly how much you can spend and stick to it.
• Make a List: Know what you need before you start looking. This helps avoid impulse buys.
• Wait Before You Buy: For non-essential items, try waiting 24 hours. If you still really want it then, and it fits your budget, okay. Often, the urge passes!
• Avoid Shopping When Emotional: Don't shop when you're bored, sad, or overly excited – you're more likely to make impulse purchases.
• Leave Temptation at Home: Maybe don't carry extra cash or cards if you know you'll be tempted.

Don't just grab the first thing you see! To get the best value for your money:

• Compare Prices: Check the price of the same or similar items at different stores or websites.
• Check Quality: Is the item well-made? Will it last? Sometimes paying a little more for better quality saves money in the long run.
• Read Reviews: See what other people who bought the item think about it. Are they happy with it? Did it break easily?

Taking a few minutes to compare can save you money and help you avoid buying junk.

Not all expenses are created equal. Priority expenses are the most important ones you need to cover first.

These are usually your needs:

• Food
• Housing/Rent (if applicable)
• Essential transportation (like bus fare to school)
• School supplies
• Basic utilities (like electricity, water)
• Essential healthcare

Expenses for hobbies, entertainment, new clothes (beyond basic needs), or eating out are usually lower priority. Make sure your essential costs are covered before spending on wants.

Sometimes you might feel pressured to buy things just because your friends have them or because you think it will make you look cool or fit in. This is called peer pressure buying.

Buying things just to impress others is rarely a good idea:

• It wastes your money on things you might not even truly want or need.
• It doesn't lead to real friendships or happiness.
• It can lead to overspending and debt.

Be confident in your own choices! Spend your money based on your needs, wants, and goals, not just to keep up with others.

Spending wisely is a skill you can build with good habits:

• Plan Your Purchases: Make a list before you shop.
• Track Your Spending: Know where your money is going (we'll cover budgeting later!).
• Compare Prices & Quality: Don't just buy the first thing you see.
• Think Needs vs. Wants: Be honest with yourself.
• Wait Before Buying Non-Essentials: Avoid impulse buys.
• Learn to Say No: To yourself, to tempting offers, and sometimes even to friends if it means overspending.

Services that let you buy something now and pay for it in smaller chunks later (like Afterpay, Klarna, or similar options) sound tempting. But be careful!

The Danger: It's easy to lose track of how much you owe across different purchases. If you miss payments, you can face hefty fees and interest charges, quickly falling into debt.

The Rule: Only use BNPL if you are 100% sure you can comfortably make ALL the future payments on time, and only for things you genuinely need and have budgeted for. Often, it's safer just to save up and pay in full.