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Managing my money for young adults
Managing my money for young adults

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2 How to manage your spending

This shows a group of young people having a meal in a restaurant.
Figure 1

You’ll have spotted that your spending is sometimes on essential things and sometimes on fun items that are clearly not essentials. But what about the things that are neither of these?

Activity 1 Can’t live without?

Timing: Allow about 10 minutes

How would you classify the items of expenditure listed below? Work through the list and decide which of these categories best describes each item:

  • an essential
  • a non-essential
  • a desirable (not an essential but something you can’t really do without).

Keep a record of the categories you’ve chosen. You might find it interesting to take a look back at these at the end of the course.

Phone
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iPad/tablet
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Gym membership
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Meal out with friends each week
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Clubbing
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A holiday or break away
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Christmas presents for aunts and uncles
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Insurance for your phone
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Daily Costa Coffee (or other brand)
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Feedback

PhoneEssential!
iPad/tabletNon-essential
Gym membershipNon-essential or, perhaps, desirable
Meal out with friends each weekNon-essential
ClubbingNon-essential
A holiday or break awayDesirable?
Christmas presents for aunts and unclesDesirable?
Insurance for your phoneEssential!? – we’ll examine this later in this session
Daily Costa Coffee (or other brand)Non-essential or, perhaps, desirable

Some suggested answers are given in the feedback, but really classifying the items of spending is a personal matter.

Most people view a phone as an essential. It’s a means of wider e-communication and making transactions. Insuring your phone could be an essential cost too.

Most people would view having a break away, even if not a full holiday, as being close to an essential.

The other choices will vary from one person to another and will depend in part on what other members of your family and your friends do. The people closest to you and social pressures are very influential when it comes to financial behaviour.

What’s the reason for linking your spending to what is essential and what is important to you but not essential? It’s so that you develop clear thinking about where to make economies if your income is not keeping pace with your planned spending.

When you have to make cutbacks to your spending, start with the clear non-essentials. And then, if necessary, target those things that are not really essential – even though it’s difficult for you to do without them. Sometimes managing money means making tough choices.