Budget Sense

The COVID-19 pandemic has fundamentally changed the way we live our lives, forcing us to stay at home and rely on technology more than ever before. While platforms like UberEats, Amazon, and TikTok were already popular, they have become ubiquitous during the lockdowns, to the point where they are now virtually synonymous with the pandemic itself. But it’s not just these platforms that have captured our attention and loyalty; there are countless others that have kept us glued to our screens and spending money in ways we never imagined. From social media giants like Instagram, Facebook, and Snapchat to e-commerce sites like Etsy and Wayfair, these platforms have become an integral part of our daily routines, and for many, even an addiction. In this post, we’ll explore the dangers of these habits, the impact they can have on our lives, and what we can do to break free from their grip.

Many of us have developed a routine of mindlessly using apps to the point of forming automated habits, without considering the negative consequences they may have on our lives. In fact, recent studies on the power of habits indicate that habits can either work for us or against us, and in the case of excessive use of certain apps, it is clearly the latter. As we reach the third anniversary of lockdowns caused by the pandemic, it is time to take stock of the bad habits that we may have picked up during this time. The amount of money we have wasted on online ordering of food, clothing, electronics, and other items is staggering. However, this is only the tip of the iceberg. The countless hours we have lost to endless scrolling through TikTok, Reels, and YouTube shorts are equally alarming. These hours could have been utilized for more productive activities that could have provided us with a better return on our investment of time.

Where do you start? first, take an inventory of the apps that you started using more often 3 years ago and have continued to do till now, to the point of addiction. Let us take TikTok (time waste) or UberEarts (Money waste) to tackle, since they are most synonymous with the lockdowns and which most people have continued to use extensively till this day. Personally speaking, I am proud to say that I have virtually never used either service. I don’t have a TikTok account, and although I have an UberEats account, I have used it once or twice, and even that was for other family members. Check these apps and see how much time and money is being wasted on them. For time spent on apps, check ‘Screen Time’ on iOS or ‘Digital WellBeing’ on Android. As for money being spent using UberEats or other food ordering and delivery platforms, simply check your credit card statement or online bank account.

Once you identify the major sources of time and money leak, take proper and concrete steps to address the issue. You can go the easy route or start small by deciding how much time/money you would like to dedicate to each per month. Or you could take the nuclear option and just remove both apps altogether. Yes, going cold turkey on apps you are addicted to may not be easy, but you could give it a try. It will hurt in the first few days or weeks, but will get easy later. In fact, it will not only get easier, you will feel like a new person – relieved – with all the money and time saved.

Some people may use these apps for their convenience. While others enjoy what they offer, after all, what is wrong with some binge watching after a long day at work or school? And while that may be true, we all know the slippery slope this creates, and may not wake up to things until it is too late. Of course, there are always exceptions and some may have more self control than others.

In conclusion, the COVID-19 lockdowns have brought about an increased reliance on online platforms, leading to the development of addictive habits that can have serious consequences on our time and money. It’s essential to take inventory of our app usage and identify the sources of time and money leaks, such as TikTok and UberEats, which have become synonymous with the lockdowns. While these apps may be convenient or even enjoyable, they can also lead to wasted time and money. Therefore, it’s crucial to take concrete steps to address the issue, whether it’s setting limits or going cold turkey. By doing so, we can reclaim our time and money and develop healthier habits for the future.

Thanks to James Clear’s extremely popular book, ‘Atomic Habits’, the study of habits has become a very popular topic in the last few years. Podcasts, blogs and the personal development field in general have all picked up on it and made it into a trendy topic to dissect and discuss. Personally, and despite having been in what seem to be a minority who have yet to read the aforementioned book, I been increasingly using the power of habit formation to solidify different health and money aspects into my life recently and they have become second nature. Some of these include:

Walking for half hour daily , for a min of 5 days a week: ever since Covid lockdowns were imposed in March 2020, I stopped going to the gym and never been back since. I replaced that with walking, and hiking in the summer. My walks have been such an integral part of my life, that I currently have an amazing 1,000+ day move streak on my Apple Watch! I couldn’t have set such an amazing streak without the power of habit formation, where something becomes almost automatic and not much effort or thought goes into starting it.

Flossing at night : while I have always took great care of my teeth, including period visits to the dentist, flossing is something I was never consistent with. No more. After coming across this article, and applying what I know regarding habit formations, flossing has now become a daily thing since Jan 1st of this year and I have never skipped a day.

Doing 15 push-ups a day: this actually started last year, where I started with 10 pushups a day, and increasing it by 1 every month, so that by December, I was going 22 pushups a day. This made it into a daily habit, so for 2023, I have been a daily count of 15 pushups and I have yet to skip a day.

Applying the power of habit formation to further our finances

The power of habit, once automated, is a force to be reckoned with, . Habits are the actions we take every day, whether we realize it or not. They can either push us forward or hold us back. When it comes to finances and money, habits can be the difference between living paycheck to paycheck and building wealth for the long term.

To start, one of the most important habits to cultivate is saving money. Saving money can be difficult, especially when we live in a culture that encourages us to constantly splurge and spend. However, by making saving a habit, we can set ourselves up for financial success. But how? One way to do this is by automating our savings. Most if not all banks nowadays offer automatic savings plans that allow us to set aside a certain amount of money each month. By doing this, we don’t have to rely on our willpower to save money. It becomes a habit, and before we know it, we have a substantial amount of money saved.

Another important habit is tracking our spending. It can be easy to lose track of where our money is going, but by keeping track of our expenses, we can identify areas where we can cut back. This can be as simple as using a budgeting app or writing down expenses in a notebook, but the latter is not as popular these days due to the advent of apps which makes tracking easier.

In addition to saving and tracking our spending, investing is another habit that can lead to greater wealth. Investing can be intimidating for those who have never done it, but by starting small and consistently investing a portion of our income, we can build a portfolio that will grow over time. What matters is taking that first step, automating it, and then forgetting about it for the most part, other than an annual or semi-annual review and making adjustments if needed.

It’s important to note that building wealth through habits is a long-term process, requiring patience, and not something that will happen overnight. But what is virtually guaranteed is that by consistently practicing good financial habits, we can set ourselves up for success in the future.

One example of the power of habit in action is the story of Warren Buffett. Buffett is known for his incredible wealth, but what many people don’t realize is that he built his fortune through consistent, disciplined habits.

Of course, developing good financial habits is easier said than done. It can be difficult to break old habits and develop new ones. However, there are a few strategies that can make the process easier.

One strategy is to start small. Trying to completely revamp our financial habits overnight is a recipe for failure. Instead, we should focus on developing one habit at a time. For example, we could start by automating our savings and then move on to tracking our spending. Another strategy is to find accountability. Whether it’s a friend, family member, or even a financial advisor, having someone to hold us accountable can make a big difference. These can help us stay on track and offer support when we need it. Last but not least, it’s important to recognize that this requires patience. Developing new habits takes time, effort and dedication. We will likely make mistakes along the way, but it’s important to stay focused on our long-term goals.

In conclusion, the power of habit is a powerful tool when it comes to building wealth and be financially independent. By developing good financial habits, such as saving, tracking our spending, and investing, we can set ourselves up for financial success. While it may be difficult to break old habits and develop new ones, with time, effort, and patience, we can build the habits that will lead us to a more secure financial future.

Imagine how banking used to be done just 10 years ago, never mind 20 or 30 years ago:

If you wanted to send money to someone or pay a bill, you would usually have to go to a bank, thus wasting time and even gas driving there to do your banking. Yes online banking has been with us for more than a decade, but it was for the select few that felt comfortable using it. It is only the last 10-15 years, after the invention and popularization of mobile apps, couple with online security becoming more solid, that it really took off and has become an essential part of our budgeting and finance management. This is just one example of how technology has simplified how we manage our money, save it, and by extension help us become richer. While there are countless ways that technology can be used to simplify our finances, below, we look at some of the most popular ones.

Using apps to manage your money

As mentioned earlier, apps are at the heart of this digital revolution of how we manage our money and finances. As they say, there is an app for anything you can think of, including banking, price comparison, online shopping, product reviews etc. One of the best features of online banking apps is your ability to manage your bill payments, transfers and sending money so much easier. One specific feature I use is to transfer money from my checking account to my VISA account as I make purchases. With all of these at our finger tips, they should be used extensively to get the most of your money.

Using online price comparison tools to decide your next purchase

Whether it is to book travel, buy a car or a household appliance, never buy an item that will cost you hundreds or thousands, without using 2 or 3 sites to compare price. For example, if you are booking a flight from Toronto to Los Angeles for 3 adults, the difference between two sites for the same flights could be anywhere from $100 to $200. Same goes with buying a laptop or other electronics: some sites may be running a promotion where you can save hundreds compared to buying from another site. So there is absolutely no reason to buy from one site without looking at other sites. While there are plenty of apps that will help you do this, there are browser extensions for doing it the old way from a laptop and desktop. Again, other than the need for a car if you are doing deliveries and transportation, the only other thing you need is a phone with an internet connection: technology will take care of the rest in helping you make a good and reliable income.

Robo advisors

This is a new feature that is becoming more and more popular with banks and investment firms: it is a technology that lets you automate your investment and have a computer do the work for you. In other words, it provides financial planning services through automated algorithms, without any human involvement. And what makes this service even more appealing in addition to making things more automated and less manual, is the fact that it learns and adjusts as you go. It does this using AI (Artificial Intelligence) . Most banks offer this service now, thus freeing you from having to manually check your portfolio and adjusting things every few months.

Side Hustles

Uber. E-Bay. Youtube. Etsy. Kijiji. TaskRabbit. DoorDash: these are some of the hundreds of apps and online platforms that you can use to create a side income; a fulltime one for many. What makes these platforms appealing is their flexibility, where you can create your own schedule for the most part, all by using your phone only. It is not uncommon for some people to have a combination of these various tools at the same time: for example, some could use DoorDash to make food delivery, Uber for ridesharing, TaskRabbit to complete small jobs in the neighborhood and E-Bay to sell books and other used items.

Of course, like with a lot of things, technology has been a double edged sword, where it has also made it easier for people to spend money online, using just a few clicks. In the past, you would need to get dressed, drive down to the nearest store or mall to be able to spend your money. Now, you can do it 24/7, even if you are in your pajamas or in your bathroom.

The various digital tools at our fingertips not only make it easier to manage our finances, they can help us save a lot of time if used properly. Take the time to go through your finances and investments and see if you are taking advantage of all the digital tools out there.

You have been paying off your new iPhone for two years and it has now been fully paid off and come off your bill: your phone bill is now $30 less every month. You happen to be a lucky (or good employee) who just got a 5% raise to their salary. Or maybe you are a good driver and your new insurance premium is $40 lower per month.

These are all examples of new money coming to your budget. Not a bad position to be in, especially if your budget was already stretched to the last penny.

The natural question that comes to mind is: what do you do with this new extra money, assuming it is anywhere from $25 to $50 per paycheck (bi-weekly pay) ? do you just spend it? do you save it? or maybe a combination of these and others? First off, and unless you already fulfill your other obligations in terms of saving and have no debt to pay off, the worst use would be to just spend it. This is money you never had it so you can’t just spend it. There are much better ways to put it to use instead:

Start or increase charitable giving

There is an inspirational meme I came across recently: “when god blesses you financially don’t raise your standard of living, raise your standard of giving instead”.  So instead of wasting this extra money, dedicate some or all of it to charity. Assuming you have an extra $40 in your budget, that would be barely enough for a dinner night out for two, whereas dedicating it to charity would go a long way and feed many people at once.

Pay off Debt

Unless your debt is $1000 or less, getting an extra $25-50 in your budget and using it to pay off debt, may not be significant enough if your debt is a lot bigger (say in the tens of thousands) . But if you weren’t paying enough towards your debt reduction, then it makes sense to dedicate this newly found money to go towards that. For example, if you were only paying $35 per paycheck, you could double that to $70 which means you are now paying close to $2K towards your debt elimination.

Saving and Investing 

I often tell friends and family that you can never save or invest enough money. The more the better. The higher the amount your save and invest, the faster  you get to financial freedom and independence. So while putting an extra $650 to $1000 towards saving and investing each year may not seem like a lot, it does when it is being added on top of existing money that you set aside for this purpose. For example, if you were saving just over $4K a year, adding an extra $700 a year will put you over $5K a year and with the passage of time and magic of compounding, your money will exponentially increase after just a few years.

When new money comes to you or is freed up from your budget, you are free to spend it as you like, since it is your money after all. But there are better uses for it than to just spend it. Think of this as money you never had, hence it doesn’t make sense to just blow it on useless purchases. Instead, think of helping others, paying off debt or long term in the form of investments.  Any one of these will have huge positive impact and returns for years to come.