How you can cut back on non-essential spending and save more

Housing, groceries, transportation and electricity are what we call essential expenses – we need to pay for them.

What we can control, on the other hand, are non-essential expenses. You know, all those “little things” we buy that don’t seem like much at the time. But when the bills come in, we may wonder if those purchases were really necessary.

“Many people don’t think these small purchases have much impact on their budget. But non-essentials can add up quickly without us even noticing,” explains Nathalie Jacques, a Sun Life financial security advisor.

Perhaps you could avoid some of that often-impulsive buying and take control of your finances, without changing your lifestyle too much.

Where is my money going? Essential vs. Non-essential expenses

Essential expenses are the things you can’t do without; for example, rent or mortgage payments, groceries, life and health insurance premiums, and credit card repayments.

Here are some examples of non-essential expenses:

• Music and content streaming platforms (Netflix, Disney+, Spotify, etc.),
• Meal delivery services (Uber Eats, DoorDash, meal kits),
• Eating out at restaurants or buying that expensive coffee.

Gray areas of spending often relate to your personal values or lifestyle. That could be needing a higher-speed internet, organic produce, or a gym membership.

Identify your spending triggers

Here are 10 common spending triggers that can cause us to buy non-essential items:

1. Sales & promotions: limited-time discounts, seasonal sales, and "too good to pass up" deals can trigger impulse purchases. Sometimes we experience FOMO (Fear of Missing Out) and buy limited edition items or exclusive offers.
2. Marketing tactics: targeted ads, email promotions, and persuasive in-store displays.
3. Convenience: easy online shopping and one-click purchasing.
4. Payday spending: the temporary feeling of having extra money after getting paid.
5. Credit cards or paying with your phone: the psychological distance from spending actual cash can lead to overspending.
6. Holidays & special occasions: increased spending around Christmas, birthdays, etc.
7. Emotions: shopping to cope with stress, boredom, or sadness, or to celebrate good news.
8. Retail therapy: shopping as a form of self-care or to boost your mood.
9. Social media influence: seeing products promoted by influencers or friends on platforms like Instagram or TikTok.
10. Comparing lifestyles: trying to "keep up with the Joneses" or match a certain lifestyle you’ve seen online or in media.

See if any of these tactics have caused you to open your wallet. You could track your spending and see if there’s a pattern. Realizing what’s going on is the first step to making a positive change in your spending.

Check out this real-life example

Amélie, one of Nathalie Jacques’ clients, realized she was spending $300 a month at her local coffee shop. Her son’s friend discovered he was spending $150 on mobile apps and games. That’s a lot.

Some expenses add up quickly and we don’t even realize it. Sometimes the charges come straight off our credit card every month.

Buying fewer coffees and snacks every month and cutting that coffee shop bill in half would result in savings of $1,800 ($150 x 12) in just one year!

Practical tips to reduce non-essential spending

The first thing to do is take a good, hard look at your spending. But where do you start?

Here are two key ways to reduce your non-essential spending and get into or stay in good financial shape:

1. Keeping track of each expense will show how much of your money goes to non-essential purchases.

Nathalie Jacques suggests you keep all your receipts and add them up at the end of the month. That will give you a pretty good idea where your money’s going. Expense tracking apps and Sun Life’s Budget Calculator can help do that for you.

2. It’s essential to make a budget, stick to it and review it regularly.

Laurence and her partner include all their shared monthly expenses in their budget. Why? So they can save enough to buy a condo in a few years. “I recalculate our budget 2 or 3 times per year. Especially if there’s a big change in how much we’re paying for electricity or insurance,” Laurence explains. “That way, our joint account balance reflects what’s actually happening with our money.”

Here are some other tips:

• Use that budget to set specific, achievable savings goals.
• Limit impulse purchases.
• Try to start making your own meals at home and getting a coffee maker.
• Review your subscriptions.

Make intentional choices, not sacrifices

One good way to curb your spending? Stick to the magical number three. For example, limit yourself to three expenses or subscriptions under $20 every month. After a few months, re-assess what you’re getting out of each one. Another tip: avoid automatic payments as much as possible. That will help make it easier to keep track of your spending.

Budgeting isn’t about deprivation, but aligning spending with your true values.

Martin Huard (available in French only) is a Sun Life financial planner. In his view, trying to free up more time is a great idea. As long as you use your time wisely! If you’re buying meal kits, you’ll have fewer groceries to buy. But what are you going to do with the extra time you’ve saved? If you watch more TV, you’ll finish all your shows pretty quickly. Then you might be tempted to add another streaming service. The result? You’ll end up spending more on both food and entertainment. But if you spend that time on an activity instead, that’s worth its weight in gold.