When you make more money or get a raise is your first instinct to send that money to your Pay Yourself First account? If you answered “no,” you’re not alone. Knowing you need to save money, while feeling like you deserve a nicer, more materialistic life is an issue most people confront in their lives.
Unfortunately, the rationalization often spirals out of control. The more money you make, the easier convincing yourself you need new or better things to survive becomes. Whether that’s a designer laptop bag, the latest smartwatch or an Ultra HD subscription to Netflix when “Stranger Things” looks just as good in Standard HD.
But, at least in the U.S., we’re already spending much more than we’re saving. According to recent figures, U.S. consumer spending rose solidly in December 2017 as demand for goods and services increased. But savings dropped to a 10-year low.
Why you upgrade when you need to save money
Spending doesn’t always make us happier in the end — especially at the expense of saving toward our Financial Freedom. So what’s behind the phenomenon to upgrade our lifestyles when we have cash?
This answer to this question, often posed to mental health experts, is rooted in multiple factors. One common issue is “retail therapy” which we’ve talked about on this site before. That’s the idea that buying something immediately will give us a rush or a surge of happiness when we’re feeling down. But there are free alternatives to cheer you up like working out, binge-watching a show that comforts you or cooking your favorite meal that won’t affect your future Freedom.
Sometimes overspending is a result of feeling you deserve a material treat. Not that we don’t support the “Treat Yo’self” philosophy, because we do! But only when you’ve planned for it.
Having a credit card can make “rewards spending” more tempting. According to a recent study from finder.com, men are more likely than women to go on a rewards spending spree (30.9% vs 27.6%). And spend double that of women with an average $3,021.31 to a woman’s $1,852.87.
But most of those good feelings you get from new material possessions are temporary.
5 strategies to cut expenses
If you’ve been guilty of indulging instead of saving your extra cash, you still have time to turn yourself around. Here are five strategies to help you scale down your lifestyle spending:
Strategy #1: Whittle down recurring expenses
The first, and easiest, way to trim expenditures is to take a hard look at recurring costs. Do you really need a $150-per-month membership to a boutique gym if you only go twice a month? Or would a gym that costs $10 a month do the trick? Is a $200 unlimited data plan, when you only use 32 KB of data each month, necessary?
Strategy #2: Prioritize, then cut
Life is about living within, or below, our means. But you don’t have to cut out all the fun. In fact, just like dieting, cutting too much can cause you to have the urge to binge-spend later. To lower your lifestyle expenses in the most balanced way, make a list of your non-essential regular purchases in a given month, starting with what you love and use the most (e.g., 1. Netflix, 2. highlights 3. boutique fitness classes, 4. weekly tennis lessons, 5. bimonthly massages). Then, look for ways to downscale every item that isn’t in your top three.
Strategy #3: Send extra earnings to your PYF account
Automatic deductions are great for setting aside specific amounts of cash. But if you’re a contract worker or have variable expenses, you don’t always know when you’ll have cash-heavy month. To ensure you won’t spend your surplus funds, make a rule that 90 percent of your extra cash goes directly into your Freedom Generator. Put this goal in writing and share it with your financial coach, if that helps.
Strategy #4: Look for high-quality alternatives to cash goods
When I was little, my dad relied on Consumer Reports magazine to make purchasing decisions, not viral campaigns and Facebook ads. Before you buy something full price, check eBay, Postmark or other resource sites for next-to-new or totally new goods.
Strategy #5: Make friends with the same goals
The company you keep can have a powerful, influencing force. If your friends are big spenders, you may feel entitled to spend big — even if they bring in 8x as much income as you. Instead of comparing yourself to others, define your dreams and goals and focus on them. And it doesn’t hurt to join forces with others on the path to Financial Freedom. Nothing but good can come from inspiring and support others!
While downscaling your lifestyle expenses may be challenging, it isn’t impossible. Always remember to look at the big picture: your goal is to create a life of abundance, free from trading your time for money. Everything you do today to help achieve that goal will get you there more quickly.
The views and opinions expressed are those of the guest author and do not necessarily reflect the views and opinions of MindShift.money.
image credit: Bigstock/Gorilla
Marisa Torrieri is an award-winning journalist and freelance writer specializing in personal finance, business, healthcare and technology. She has a master’s degree in journalism from Northwestern University and resides in Fairfield, CT. Her work has appeared in dozens of media outlets, including LearnVest, Forbes, The Washington Post, Business Insider, TIME and Health.com.