It can be extremely difficult to spend less, especially if you are not sure how your spending is getting out of control. While budgeting and tracking your spending are great tools to help you in your endeavor to spend less, the urge to spend can often overwhelm your better judgment.
Frivolous spending can be a major problem that cannot be fixed by creating a budget or meticulously tracking your spending alone. While budgeting helps you put limits on your spending, you may find that changing your attitude is necessary to help you stop spending money when you have the urge.
When you have the urge to spend money, think of at least 2 other things that you could buy with that amount of money to help yourself spend less.
When I get the urge to spend it is because I am perceiving an increase in the level of my happiness from exchanging my money for the thing I want to buy. Going shopping at the mall for nothing in particular is a great example of how we as humans love to anticipate the acquisition of “things”. This is not necessarily a bad thing, but it can lead to spending more than you can or want to afford.
To spend less money when spending opportunities arise, think of a few things that you really enjoy that cost around the same amount of money. Then think of similar items that may be out there that you might like even more or that might cost less.
Example 1: Spend less by imagining various alternative possibilities
Imagine that you are at the mall and you see a great pair of shoes for $60. You may decide in that moment that you could use a new pair of shoes; however, before you take the shoes up to the counter, think of what else you might be able to buy using that $60. Are there any other items that you have been wanting that cost $60? Do you enjoy new pants even more than shoes and would you enjoy a pair of pants more for the same amount of money? Could there be another pair of shoes out there that you might like more or a pair that is cheaper?
When you spend money to acquire an item you are foregoing the endless opportunity that that money ($60 in this case) affords you. Before the money is spent, you could have purchased anything in the mall or outside of the mall that was $60 or less, including different shoes, a few shirts, a video game… the list goes on. You could also buy something in the future for $60 when you really need it. But after you spend the money, you are left with only those items you actually bought for $60. You no longer have options with that $60, you are simply stuck with the thing you bought.
Given this, the question to ask yourself when making a purchase is: “is this item going to bring me the absolute maximum amount of happiness for this amount of money or can I imagine something even better”. If you can imagine something better, now or in the future, then save the money for another time.
Example 2: Spend less by imagining things you will want to buy in the future.
The purpose of money is to give you the ability to easily trade your own labor/capital for goods and services. If you want to go on vacation now or buy a new car now, chances are you will still want to do those types of things in the future. Unfortunately, the human body degrades over time and limits our ability to make money as we grow older. With that in mind, the next time you are out making a frivolous purchase (let’s use the $60 pair of shoes again), imagine yourself at age 70 at Value Village (a thrift store) looking at used shoes for $10 and not really being able to afford anything because you have already spent through your social security check.
While this is hopefully somewhat of an exaggeration (hopefully you are already saving for retirement), this shows how your imagination can be a powerful tool to help you spend less. Simply run a few of these scenarios through your mind every time you want to make a frivolous purchase; if you still think it is worth it to spend the money despite those scenarios then you have proved to yourself that you do indeed really want the item in question.
Example 3: Spend less by considering cheaper but equally satisfying options
In the heat of the moment you may feel as if the thing you want is worth any amount of money and therefore it is worth buying regardless of the cost. An example of this is eating out at expensive restaurants. I personally love to eat out, and it can be a lot of fun eating at a nice restaurant. Sometimes I get urges to eat somewhere nice, and even knowing that the cost will likely be higher than $50 for me and my fiancé, I convince myself that it will be worth it. At the end of the night; however, I often find myself wondering if the $80 for a few entrées and drinks at a nice place would have been better spent on four $20 meals.
To help you spend less than you would at a fancy place, try coming up with a few cheaper restaurants that you really enjoy. The next time you feel the need to eat out, think about how many more meals you could have at your favorite less expensive restaurants. Imagine the happiness you will get from eating out 4 times versus only once. If you still feel that eating once at the fancy restaurant trumps 4 times at your favorite less expensive option then you can opt for the fancier place. Retirement