We asked an expert how to spend our money like adults

Life is expensive, no matter how much you earn.

Paying rent, checking off bills, buying groceries and gifts all add up — especially when you’re not spending smart. The feeling of receiving your paycheque, only to realize every dollar you just earned has to go towards bills, is truly the worst.

This scenario is called “the spending vortex” and it’s something author Shannon Lee Simmons talks about in her book Worry-Free Money. Simmons is the founder of the New School of Finance and has been working with Interac to discuss smart money choices.

Here’s the thing: If you have no spending strategy, you’re never sure if you can actually afford something, and this leads to money anxiety. But you can always change your approach. We spoke with Shannon Lee Simmons to find out how.

Condense your budget with less spending categories

When you set yourself a strict budget for takeout, coffee shops, bills, etc., you’re often setting yourself up for failure, according to Simmons.

“You forecast your spending goals in these very restrictive categories then do your best to live within the confines of the rigid budget. What if one weekend your family comes over and you need to buy a lot of cheese? What if the next week you need to buy a new shirt for work? Enough already. There are only four types of money that you need in your budget: Fixed expenses, meaningful savings, short-term savings and spending money.”

• Fixed expenses (the ones you have to pay each month): Bills, housing, insurance, minimum debt payments, etc.
• Meaningful savings: Money that is being put aside to improve your net worth by increasing your assets or decreasing your debts.
• Short-term savings: Money you should be stashing away for emergencies and spikes in spending.

Once you calculate this, everything left over is spending money. That’s the money that you have to blow to zero every pay period for your life – groceries, gas, takeout, clothes, fun, and entertainment.

Calculate how much you have to spend each pay period

Simmons recommends separating how much you can spend by how often you get paid.

“For example, if you’re paid twice a month and your spending money is $700, each paycheque you can spend $350 ($700 divided by two). You don’t have to budget this $350. It’s yours to spend each payday however you wish, as long as it’s within your limit.”

Separate your spending money (with a separate account)

“I always suggest having a separate chequing account for your spending money. It’s also good to stick one payment method. This helps you set an actual limit to your spending and keep tabs on it so you don’t have to worry about receiving a bill that you can’t pay off at the end of the month. If you’ve separated your spending money into a separate chequing account, you can easily see if you can afford things.”

Simmons notes that if you spend using debit, your bank balance will be an indication of how much money you actually have left to spend until the next pay period. You can see where you spent your money and you don’t have to worry about going over your budget because it’s all tracked in real-time.

Plus, you can use your debit card or smartphone to pay contactless using Interac Debit on Mobile. And you can check your balance whenever you need to!

Spend safely and securely

“A spending strategy is one thing, but you also need to know the payment method you use is safe. Interac Flash is one of the safest forms of payment because your debit card number can’t be used to make a purchase on its own in store, and it has built-in spending limits that are set by your financial institution. For example, a transaction limit of around $100 means you can’t spend over that limit by flashing your card, as you’d have to insert your card and use your PIN to verify the payment.”

Built-in spending limits help you maintain control while protecting you if you lose your card. The Interac Zero Liability Policy means you’re not responsible for losses beyond your control.

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Spend your money stress-free without jeopardizing your bills and savings by using your own money in your checking account.

Find out more about Interac Flash here. If you don’t have Interac Flash but you’re interested in signing up, contact or visit your financial institution.