The nice thing about day-to-day spending is that you get to make these decisions often — usually more than once a day. Every day presents a new opportunity to make the choices that will help you reach your goals.
Of course it’s also important to control large, fixed expenses (such as housing and transportation) but these choices occur infrequently and there is often minimal flexibility after the fact. It’s often the smaller, frequent purchases that can really ruin your budget or plans for financial independence.
Everyone’s heard the old advice about how cutting out a daily coffee results in so much money at the end of the year. I can’t argue with the truth of that. But what isn’t mentioned is the how-to of controlling such spending.
Instead here are some of my top ideas to keep daily spending controlled, minimal, and working for your specific needs. (Part two next week will include more tips, and part three will have some fun math exercises.)
1. Never gauge your needs at the store or in front of the TV or internet.
Stores and advertisements are designed to make you want things. The only time you truly need something is when you are standing in the kitchen thinking “Why don’t I have a ____________?” Apart from a few first aid and emergency supplies in your home/vehicle don’t buy anything unless you truly need it. I could have used this advice when I first moved out on my own. I bought all sorts of kitchen stuff that I didn’t actually need, just because my mother had them. Dish drying rack and tray? Not needed. Towels on the counter work better and are easier to clean.
And even then, if you need it, can you borrow it? Rent it? Get one at a garage sale, secondhand store, or on kijiji?
2. No price is low enough if you don’t need it.
There is no minimum amount that makes spending okay in all circumstances. Repeat this to yourself: “Free is not good enough.” Even if an item is only a dollar, or is free, if you don’t truly need it, don’t get it. One new thing leads to another; the next one might not be free, and too many things will lead to clutter, rather than satisfaction. I turn down almost every free item I’m offered, unless I can eat it.
3. Mentally weigh every purchase – desire vs. dollar.
When I think about a potential purchase I picture a scale in my head – money on one side, my need or desire one the other. If I don’t want something more than I value that amount of money, or the time it took to earn it, and its potential future value, I don’t buy it. (More on this math stuff next week.)
4. Have a wait list.
Is there something you want? Write it down. If you still want the item after a certain length of time then go buy it. Usually the greater the cost the longer you should wait. So you might wait a couple of hours to see if you still want that chocolate bar, and a few months to see if you want a car.
5. Or shop more often, but only for what you need.
Wait until you really need something, then buy just that. This works well for groceries if you have good self-control at the store. When meal planning think of things that you already have most of the ingredients for. Then just buy the missing ingredient(s). Never go to the store intending to buy a whole recipe’s worth of items. Then you’re just ignoring food you already have. This method also helps you wait longer because going to the store for just a few items is annoying. Can you make do with what you have for a little while longer?
6. Work on adopting a “spend nothing” mindset.
If you operate under the assumption that you just don’t spend money, then the challenge will be deciding when it makes sense to actually spend money. This is how most naturally frugal people operate. Having do-not-spend as the default setting helps us reduce impulse purchases.
Do you use any of these methods or have others to add? I’ll post my second set of tips next week, and will describe some related calculations the week after that.
See Part 2 for more tips.