Everywhere you look (and click), someone is trying to convince you that they have exactly what you NEED to make your life complete.

How do you protect yourself against the constant barrage of emotional-button-pushing?

Here’s a habit to help you reduce short-term impulse buys, and strategically taking advantage of seasonal sales, while maintaining your long-term wealth building perspective.

Let’s start by defining WEALTH:

The meaning of "need" is not universal; it is highly personal. It must be defined by you to reflect your unique situation.

How to determine what you need? These three simple steps have worked for me for many years.

Step 1: Record It

Every time you spend money, make a record of it. Even a simple spreadsheet can work, but I
recommend dedicated personal finance software such as Banktivity (for Mac & iOS) or Quicken (Windows & Mac). There are several apps available – find what works for YOU.

Step 2: Categorize It

Assign a category to every transaction. Most personal finance tracking programs/apps will come a list of common categories (“Groceries”, “Auto”, “Utilities”, etc.) and you can add more to suit your own lifestyle.

Step 3: Tag It

This step is where the ‘behavioural’ magic happens. Assign every transaction one of three TAGS: Essential, Discretionary or Extravagant.

Items such as groceries, utilities, and property taxes (to name a few) get the “Essential” tag; you need these basics to survive.

What could you do without for a while, if necessary? Tag these sorts of items as “Discretionary”. This could include items such as subscription services, dining out, travel, etc. It's different for everyone. One person's Need could be another person's Discretionary.

The last tag is Extravagant. For my family, this would include a new instrument for our music room. These expenses can be easily postponed, if not completely avoided (how many keyboards do we really need?).

Once you’ve established this Record/Categorize/Tag habit, a picture of your needs (Essential) as well as your wants (Discretionary + Extravagant) emerges. This will certainly help you reduce impulse buys and make strategic use of seasonal sales to confidently enjoy your wants as well.

More importantly, you will be armed with the basis for a meaningful long-term financial plan.

Based on your unique needs, we develop and refine your plan. We’ll determine appropriate insurance coverages and savings rates, target required investment returns, optimize government benefits, and employ available tax strategies – all to achieve that ultimate goal of building WEALTH (as defined by YOU).