How cutting out financial fritter can set you up for success

by | Aug 24, 2023 | Managing Your Finances

Ever had that feeling of ‘where did all my money go?’

You have no recollection of when you spent it, where you spent it, or what you spent it on – but somehow, your bank account balance has been depleted.

You may be a victim of … fritter.

So, what is fritter? Fritter is money you’re spending on things you don’t need and aren’t necessarily making you any happier. It’s estimated that Kiwis fritter about 15% of their income. Which (if you’re doing the mental math) can be a scary enough number in and of itself – and over the years this can really add up.

And what makes fritter dangerous is that for the most part, we don’t even clock that we’re spending the money, and we’re spending money more often than we think.

Therefore, it could be fritter that’s returning your bank balance back to $0, and it could be fritter that’s holding you back from making financial progress as quickly as you could.

Where are Kiwis frittering?

We’ve found that a lot of fritter is ending up at the grocery store – and we all know they don’t need any help when it comes to profit! We see a lot of clients spending well above what they need to comfortably feed themselves and their families.

We had one client, for example, who spent ~$500 for their grocery shopping each fortnight. They’d then also do about four top-ups coming to ~$120 a pop – quickly blowing that $500 spend out to $980.

When we went through these transactions with them, we identified they could cut this down by over $100. They now spend about $400-420 on one big shop per week. This cut their fortnightly total to around $800-$840. That $100+ per fortnight saved might seem like small fry – but it’s $100 that could be used to pay off debt or get them in a better position financially elsewhere, and that’s just looking at one small area of their spending.

And the grocery store is not the only place fritter is found. It could also be a membership to the gym you never use (despite your best intentions), the lunch you buy every day, or the Uber Eats you have delivered to your door because you just can’t be bothered to cook. It could also be things like bank account fees, or even your mortgage – places where we’re not even aware that the money we’re spending isn’t necessary.

Many Kiwis are happily paying off the minimum required by the bank for their mortgage’s 30-year term. Yet if you funnelled any fritter towards that instead, there’s the potential to not only shave years off your mortgage term but thousands of dollars of interest you have to pay back to the bank.

What isn’t fritter?

A key thing to keep in mind is that fritter isn’t the money you spend on things that genuinely make you happy or add value to your life. If you’re a veritable gym bunny and doing your daily workout is the only thing keeping you sane, then we wouldn’t necessarily consider the money you pay towards your gym membership as fritter. We would however encourage you’re getting the best deal you can.

And neither are your bills- no matter how much we hate paying for the privilege of having running, heated water in our homes – though this shouldn’t stop you from shopping around for the best deal. And the same applies to insurance – you want to have the right insurance in place to protect yourself, your family, and your assets – but you don’t want to be over-insured and paying more than needed.

So, how can I stop frittering?

To stop frittering you first need to have a pretty good idea of where your money is going. It might get a little uncomfortable, but take some time to dig into your bank transactions to see exactly where your money is going – and then take some time to think about the value some of those expenses add to your life.

Need that daily cup of coffee from your favourite barista before you can be polite to your colleagues? This may be an expense you want to keep for the sake of keeping your job. But if it’s more out of habit – you walk past every day – and the coffee at the office is sufficient to satisfy your caffeine compulsion, maybe cutting back on that daily habit could free up some spare cash you could put to better use elsewhere.

Ok. Fritter is under control. What next?

Take a moment to pat yourself on the back. Then, decide how to put that money to use.

Just eliminating fritter isn’t what’s going to make you rich. A key principle of growing wealth is that you have money left over to invest. And that’s what finding (and eliminating) that fritter will help you achieve.

So, make sure you’re doing something meaningful and deliberate with it.

If you’ve got short-term debt, it might be worth putting this extra cash toward paying that off faster. If you haven’t yet built up an emergency fund – maybe open up a high-interest bank account and start building that up.

But if you’ve already got those things sorted, then it’s time to get a bit more ambitious – use it to speed up building up the deposit for your first home, pay off your mortgage faster, or look at ways to start investing to build up your long-term wealth.

And don’t feel that the fritter that is no longer frittered all needs to go towards the ‘serious’ stuff. It could also be used to bump up your savings for a trip you’ve been wanting to go on, or maybe treat yourself to that new pair of shoes you’ve had your eyes on – the things that make life worth living.

Because making financial progress doesn’t have to mean cutting out the things you love. But it does require you to be aware of where you’re spending your money, where you may be spending it unconsciously, and maybe changing things up a bit.

If you’re struggling to identify where your fritter could be hiding – chat to a financial adviser or coach. They can help you go through your spending and identify where your purchases have more to do with habit than anything else.

Disclaimer: This blog post is for informational purposes only and does not constitute individual financial advice. If you’re interested in receiving financial advice, you can book a consultation with an coach. Costs apply.


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