January 2019 was a great month. I hit the ground running with my New Year’s ambitions to become the absolute best version of myself. One of my main goals this year is to develop a solid emergency fund. I decided to jumpstart my savings by challenging myself to only spend cash in January. I also set a strict budget for myself that I took out in cash each week.
I ended up spending the least I had spent in months and learned that I can cut back on shopping and entertainment without sacrificing my enjoyment of life. I also learned that only using cash really helped me avoid impulse purchases while shopping. I was shocked to see that at the end of the month I had spent about $1000 less than the previous month (granted the previous month was December and full of gift giving, but still!).
But although I had saved a lot, I also felt burnt out, and it led to overspending in February. I luckily didn’t go into debt or anything extreme, but found myself purchasing items that qualified as wants rather than needs much more often this past February. This included a new haircut, new clothes, and a few more dinners out than usual. Now I find myself in March questioning how I can spend less, without it backfiring and causing me to overspend. Below are my thoughts on the three lessons I’ve taken away after successfully cutting my spending by a third in January, and unfortunately having that backfire in February.
1. Set a Budget that Allows for Flexibility
In January, I basically tested out the extreme end of how little I can spend. Although I learned that, yes, I can drastically cut my purchases and be okay, it was a rather abrupt transition to go from a more carefree spending mindset to an extremely strict budget. In March, I am aiming to only spend cash, but I am giving myself more wiggle room. I am not setting strict numbers to hit each week, but instead letting myself intuitively spend throughout the month, and always with intention.
Although my inner perfectionist loves the idea of one day only spending like $100 a week, I know that realistically I will likely have trouble maintaining that strict of a budget. I get joy out of occasionally buying nice clothes and going out to brunch and want to allow myself the occasional indulgence. If you are a person that can live frugally and follow a strict budget, you should go for it, as it does allow for your savings to build up quickly. But if you are like me and tend to rebel against strict rules, I recommend trying out a more intuitive budget that aims for frugality but allows for occasional and sometimes spontaneous indulgences.
2. Think Longer-Term
I love “30-day” challenges, from the “Whole 30” to spending challenges. But it can be tough to transition out of those challenges back to everyday life. Rather than short and sweet challenges like my cash-only January, I am now challenging myself to think more about lifestyle changes rather than challenges that save money in the short term but can sometimes backfire and lead to higher spending.
This is where the correlation between money and food resonates with me. As soon as I finish a restrictive diet, I find myself wanting to indulge more than ever. The same goes for money. When I restrict myself from spending, I find that the desire to do so gets stronger than it was before. So I’m returning to what’s worked best for me in the past: setting specific goals without setting specific paths to reach them.
For example, I have specific saving goals set, and I am mindfully working towards those. However, I am not saving the same exact amount every single month. I’ve found that setting a specific numerical goal, with a general date that I would like to hit that goal, inspires me to spend less in general, as opposed to trying to spend less and save more without specific goals. The ambiguity of my path to reach that goal allows me to be flexible with how much I save from each paycheck. When I reach a savings goal I take a few days to celebrate that goal, and then set a new one and the process continues. This is a less rigid approach that impacts my daily spending without over-structuring it.
3. Enjoy What Your Money Can Buy
Sometimes, it’s easy to think too much about the numbers and savings goals you are trying to hit. I’ve dealt with feeling guilty about spending and questioning whether I should have saved the money instead. This loop of anxiety brings a dark cloud over your general relationship with money.
But you can get to a point where you not only feel empowered by your savings but also by your spending. Personally, I’ve found that the most manageable tactic is to automatically save 20% a month without a question. I aim to save about 10% more on top of that, but I don’t need to hit that every month. As long as I’m hitting that 20% goal, I let myself off the hook a bit with the rest of my money. I know that saving will serve my long-term goals, but occasionally I am okay with indulging in things like a good haircut, great jeans, or a dinner out because those things do elevate my experience in the present, which is important.
Learning to spend your money with joy and gratitude for what it is getting you has been a mindset shift that has helped me feel less stressed over money in general. I recently got my tax refund, and although I saved and paid debt with about 60% of it, I let myself have some fun spending the other 40%! I got a luxurious haircut (with color included) and purchased a ring that I know I will wear almost daily. Knowing I had saved some and spent some on items that brought joy to my life left me feeling satisfied. I’m sure this sense of balance will continue to evolve and develop as my life changes, but it’s something I hope to always come back to.
Mona is a writer living in the Pacific Northwest. She likes drinking coffee, summiting mountains, and eating mangos. She is currently writing about all things related to money on her blog monasmoney.wordpress.com.
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