The 4-Step Guide To Talking Yourself Out Of Spending Money You Should Be Saving
Do you struggle with reducing your spending, even though you know you’re buying things you don’t need? I do.
It’s something I’m constantly working on. I see something I want, and I have to convince myself to stop spending money. Sometimes it works, sometimes it doesn’t. Reducing temptations by staying away from the mall and not browsing online retailers in my free time helps. I’m like a kid that way. You know how they have parental controls for non-PG websites? I need that, but for Amazon (and Sephora and ASOS and Old Navy…).
But without going completely offline, there is no way to remove all temptations (I’m looking at you Instagram Ads). You still need an arsenal of tactics to trick your brain into not wanting that thing. Shifting your mindset doesn’t have to be a big deal. It can be as easy as taking one extra minute before swiping your credit card to consider the value it will add to your life. Challenging yourself to justify a purchase before finalizing it is a good habit to create — but how do you do it?
1. Really Consider the Simplicity of Spending Money
With the creation of credit cards and online shopping, money has lost its tangibility. Spending money has become such a simple transaction that I rarely pause to consider a purchase before clicking “Confirm.” So I refuse to enable the one-click ordering on Amazon, because it’s already too easy! You get a receipt in your inbox that you probably never look at and wait for the shipment to show up on your doorstep. A few weeks later, you’ll skim over your credit card bill and pay that off. Each purchase will blend together, and you’ll be left wondering how you racked up such a big bill.
Think about this in comparison to the past. Way back when (but really not that long ago), you had to get out of bed, put on real clothes, walk or drive to the bank to withdraw money, go to a store, find what you need, fork over that cash you just pulled out, and finally go back home. I am lazy; there is pretty much zero chance I would do all these steps unless it is something I desperately want or need. Grabbing my laptop off the bedside table and clicking one button is hardly the same deterrent.
I’m all for efficiency, but the simplicity of spending is affecting how and why we buy.
2. Determine Your Hourly Wage
I know I’m not willing to swear off online shopping and credit card rewards so, without doing that, how can I make spending more challenging? Relating money to something else helps. For me, that something is time. And to figure that out, I need to know what my time is worth.
If you work on salary and have never calculated your hourly wage, it might surprise you (good or bad). Mine works out to about $50 CAD/hour ($39.50 USD), which is higher than I would have guessed. I have a flexible (and variable) schedule, and I don’t work Mondays, so my limited hours bump up that number. To figure it out I took my annual salary, divided by the number of hours I work in a year (an average week times 52). It’s an estimate, as my hours do vary throughout the year and I didn’t account for vacation, but it’s close enough to make my point.
(Side note: If I ran the numbers for blogging it would be substantially lower and, honestly, probably a negative number [cringe]. I like to think of blogging as a hobby and not a job.)
Putting a number on your hourly wage is important, because it gets you thinking about the value of your time. Instead of thinking about something costing “X” dollars, think of it as costing “X” hours of your life. This is more impactful for me. There is always a way to earn extra money, but there are only so many hours in a day to do so.
Those $100 jeans are fabulous, but are they two hours worth of work fabulous? Hmm…
3. Factor in Cost Per Use
Focusing on quality over quantity can also reduce spending in the long-run because you’ll already be surrounded by items you truly love. We all have those regret-laden purchases sitting in our closets that we never reach for and always feel guilty about. Let them go. As Marie Kondo says, you should only keep items in your home that bring you joy. Hold onto a little bit of that guilt to remind yourself to make better purchases in the future.
One of my favorite articles about spending is “What if One Dollar Was Worth One Use?” by Alyssa over at Mixed Up Money. Her challenge is to reduce the value of every item you buy to $1 per use. Can you picture yourself wearing those $100 jeans 100 times? Are you going to reach for that $15 t-shirt 15 times? Will you make zoodles 40 times with that $40 spiralizer? If the answer is no, then you’re not getting enough value out of the things you buy.
Maybe you don’t think this is something you struggle with. Take a look in your closet and run a few quick calculations for the clothing you already own. I bet there are at least a few things that aren’t anywhere close to the $1 per use target. Doing this in my own closet has also taught me what styles work for me. There were trends I kept buying because I liked them on other people, but I rarely reached for those pieces when they were in my closet.
4. Think in Terms of Sustainability
It doesn’t matter if you want to build sustainable practices for selfish reasons (AKA it’s cheaper) or to keep the earth healthy for the next generation. Introducing green habits will benefit both your wallet and the planet. I had a discussion on Twitter with Freedom 33 about coffee, and he made a point I honestly hadn’t really considered:
True. Coffee doesn’t always have to go. But we should be willing to give up things that financial independence is more important than. What a lot of the #FIRE community seems to fail to recognize is the unsustainable lives we all lead, while promoting the path to others.
— Freedom 33 (@freedomthirty3) March 31, 2018
You know I’m not the person who’s going to judge your pricey latte habit. If you can work it into your budget, then you do you. However, have you considered the environmental impact of all those paper cups? Do you bring your own reusable mug? (Freedom 33 also wrote a post on this over on his blog.)
I definitely have some room for improvement in that area. We’re supposed to be talking about saving your money, not saving the planet, though. There are better resources out there for learning about that than my blog.
So, how can going green help with your spending? Focusing on the worth of your time and the cost per use of an item are better at discouraging larger purchases. Spending $5 on an item is pretty easy to justify if you’ll use it five times, or if it only costs you six minutes of time. Factoring in sustainability can make small impulse purchases seem wasteful. Think about what all goes into to making that $5 coffee. Imported coffee beans, maybe a milk carton, a paper cup, a cardboard sleeve, and a plastic lid. You’re going to enjoy it for maybe 30 minutes and will then chuck the remnants into the trash. Worth it? On some days, yes, but on other days, concern for the environment might be enough to dissuade you.
This works for material possessions as well. It can be easy to justify buying something that costs less than $20; often you won’t even think twice about it. Instead of arguing against the price, what if you use the sustainability argument. Are you likely to toss the item after just a few uses? If so, it might be a hard pass.
To Sum Up:
By developing a few tricks, you can shift your mindset away from the dollar value of a purchase to something that makes the value (or lack thereof) more apparent. It can be so easy to get caught in a cycle of buying things just because it’s so easy. Establishing a habit of questioning yourself before taking the plunge can save you money and ensure only quality items are entering your home. Figuring out what your time is worth, calculating the cost per use, or factoring in sustainability can all aid in the decision-making process of spending money.
Do you have any tips for preventing impulse purchases? Share them in the comments so we can all improve our buying habits.
Sarah is a Canadian personal finance blogger over at Smile & Conquer. She has been working in the world of finance for almost a decade and uses that experience to help other millennials get smart about their money.
Image via Unsplash