1.3.6 Video: How to reduce your spending

From: Financial Consumer Agency of Canada

Transcript

Segment 1 - Introduction:

(Host)

Spending money is both a necessity and a pleasure. The problem is that regularly spending too much can lead to big problems in the long run. It's worth taking a moment to stop and look closely at our spending habits, in order to figure out ways to avoid over-spending – it's easy to do and helps us to steer clear of debt, and start saving money.

Is over-spending a common problem? What are the things that lead people to spend more than they should? Let's find out.

Segment 2 - Problem Identification:

5 excerpts from street interviews of Canadian consumers identifying that many people struggle with over-spending.

(Questions posed to public:)

  • Do you ever spend more than you meant to spend to on frivolous or unnecessary items?
  • What are the most common unnecessary items you purchase?
  • How much do you think spending on unnecessary items costs you each week?

Segment 3 - Problem Summary:

(Host)

Everyone has a few expenses that can be reduced fairly easily. But making sacrifices doesn't necessarily mean missing out on the things that you value. It's important to figure out what things you want, and what things you really need. Take a moment to consider which of your regular purchases are necessary and which are not. This can help you identify and get what you really want.​

It's usually quite easy to identify the main things that we spend too much money on, even if it is only a small amount each time.

Take your lunch-break at work for example. Many of us "need" to visit a café or restaurant during the lunch-break, but spending $5 or $10 in this way every day really adds up. This is the kind of spending that can easily be reduced by recognizing that buying a meal is a 'want' rather than a 'need'. There are many ways of cutting down on expenses without having to give up on the things you want. For example, try making a sandwich at home and bringing it with you to work instead of buying it at a cafe. Even $5 a day adds up to a lot of money over time - and the sacrifice we make in order to save is only a small one.

Segment 4 - Tips and Strategies:

Text on screen: "Know the difference between your needs and your wants."

Checkout conveyer with common luxury items and necessities moving by thus representing and contrasting examples of obvious needs and wants.

(Host)

  • When spending and saving, your needs should always be the priority.Identify the most common unnecessary expenses in your daily habits.
  • Are you regularly buying coffee or pastries at cafes and restaurants?
  • How often are you eating out each week?
  • Do you impulsively buy items such as clothing, jewelry, and electronic gadgets?
  • Are you regularly buying things you don’t need, such as bottled water or lottery tickets?
  • How much do you spend each month at pubs and clubs? Health spas and manicurists?
  • Could you possibly walk, cycle or use public transit more often?

Once you've identified your unnecessary expenses, consider simple and practical ways of replacing or reducing these expenses. It might be something as simple as bringing your own water bottle, or renting videos instead of going to the movies.

Try leaving your credit cards at home when you go out shopping, and making a list of the items you need before you go. Then stick to it.

You can set aside a certain amount of money each month for additional spending and indulgences; do some research on prices, and 'sleep on it' before you make expensive purchases.

Segment 5 - Real People Tips:

Cut away to streeters, with consumers giving examples of tips that they successfully use. No need for an introduction to this segment, just start with an interviewee who states, for example, 'what I do to reduce expenses' or similar.

(Questions posed to public:)

What tips or strategies have you found that help to reduce your expenses?

Segment 6 - Solution Summary:

(Host)

The $5.00 you save each day by bringing a sandwich with you instead of buying it at work adds up to at least $25 a week.

Over a month, that adds up to $100 in accumulated savings, and by the end of a full year you could have saved $1200.

That $1200 can grow even more, if you invest the money.

For example, let's assume that by investing your savings or using them to pay down your mortgage you can earn 6% per year on your savings,

With a 6% annual investment return, your $1200 of annual savings can grow to nearly $7,000 in 5 years, $16,000 in 10 years and $70,000 in 25 years.

Segment 7 - Actor's concluding statement:

(Host)

Paying attention to your daily spending habits can really help. Making even small changes to the way you spend can really add up and make it easy for you to save.

  • Know the difference between your wants and your needs.
  • Spend on your needs first.
  • Avoid making impulse purchases.
  • Even the small amounts you save can grow into big savings over time.
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