10 tips to help you spend less
Excessive spending leaves us with less money to save or invest, hurting our ability to live the life we truly want and deserve,
These 10 tips will help you:
THINK about the money you’re about to spend in new ways
rearrange your environment so you’re LESS TEMPTED to spend
make it HARDER to spend
Let’s get started!
Find out how many hours of your life that purchase is worth
At university, I worked a minimum wage tutoring job. I had three students on a weekly basis, totaling around $21.75 income per week - assuming they all showed up for their sessions, which was not always the case. Not only did I spend money on gas to make the hour-long round-trip commute to work, but I always started my morning with Starbucks (Grande vanilla latte with a ham and cheese croissant). After three sessions of tutoring, I would be hungry and go to the Starbucks on campus before making the drive home.
While I don’t remember the exact cost of these orders, I do know that lattes are over $4 and croissants are over $3. Minimum wage in North Carolina was (and still is) $7.25.
It didn’t take me long to realize that 2 of my 3 daily tutoring sessions went straight to my breakfast and lunch. Each Starbucks order was worth an hour of my time at this job.
This realization completely changed my perspective on spending and I framed each purchase from then on in terms of “how many hours did I have to work to afford this?”.
Let’s say you make $15 per hour and want a $90 pair of shoes.
$90 pair of shoes / $15 per hour = 6 hours of work
That’s six hours of your life that you are trading for a pair of shoes! I’m not saying don’t do it if you really want it, just that you should consider if what you’re about to buy is really worth the time you spent.
If you’re salaried, the math is a bit trickier but not bad. If we ignore taxes and other deductions and assume that you make $50,000 a year working exactly 40 hours a week, 50 weeks a year (2 weeks for vacation), your time is worth $25 per hour.
$50,000 salary / 50 weeks = $1,000 per week
$1,000 / 40 hours per week = $25 per hour
$90 / $25 per hour = 3.6 hours
.6 * 60 minutes = 36 minutes
Those $90 shoes are still worth roughly 3 hours and 36 minutes of your time!
2. Sleep on it
Oftentimes I’ll see something and want to buy it that second. I then go on to never use what I bought or only use it a couple of times before putting it in the back corner of my closet never to be seen again.
I notice this mistake of purchasing something I didn’t really need most often when I get a huge wave of relief when something is wrong with the product or it never arrives and I get a refund - it’s like a get out of jail free card on a bad shopping decision minus the guilt!
We can skip this whole rollercoaster of emotions - shopping, regret, relief if returned - by simply thinking a bit longer about the decision before deciding to click BUY. My rule of thumb is every $100 of cost = 1 day of thinking about it before buying. So a $300 mirror is at least 3 days of thought before going through with the purchase.
Every $100 of cost = 1 day of thought
You’ll be surprised how many things you thought you wanted that, when revisited days later, just aren’t that interesting to you anymore. And if you do still want it after waiting and really thinking about it? Go for it, guilt free!
3. Find out what that money could be worth 1, 5, or 10 years from now if invested instead
Do you really want that $500 PS5? Do you really need the latest iPhone or Apple Watch? Think about this first:
$500 invested at a 6% growth rate is worth $530 after one year.
After 5 years, it will be worth $669.11.
After 10 years, it will be worth $895.42 - almost double what you started with.
And this doesn’t even include dividends! I recently received 20 cents per share from my NRZ stocks. The price per share for NRZ, as of the day I’m writing this, is $9.62.
$500 to invest, divided by $9.62 per share, is almost 52 shares of NRZ stock that you can buy. Multiply their 20 cents per share of dividends by the 52 shares you could own, and you’d receive an extra $10 every quarter, or an extra $40 every year.
That’s an extra $200 by the 5 year mark and $400 by the 10 year mark! If you reinvested the dividend income every time you received it, not only would you benefit from the 6% growth rate on that income but you’d also own even more shares from which you could earn even more dividend income - you would have easily doubled your money in 10 years.
Got a purchase coming up and want to know what you’d earn if you invested it instead? Try this free calculator here.
4. Use a preloaded card (and/or leave the cards at home!)
Please don’t bring this many Benjamins to Target…
I’ve seen advice similar to this called the “cash envelope”. The idea is that you put the cash you need, either for the week or for a specific shopping trip like getting groceries, in an envelope annnnd that’s it! That’s all you have to shop with! No cards, nothing - you leave the credit cards at home and take only your cash envelope with you to the store.
Well it’s 2021 and that advice is outdated. You can get a reloadable prepaid Mastercard or Visa (whatever you prefer) and only bring that to the store with you. Have a spend limit for Christmas or for the week? Load up that prepaid card and once it’s out - you’re done shopping!
This tip is essentially bringing the cash envelope idea to the modern age where credit cards are commonplace and a trip to the ATM feels a bit inconvenient. It can also be dangerous to walk around with an envelope full of cash, so this eliminates that issue by giving you a card that you can slip easily into your pocket, out of sight and not drawing any unwanted attention.
Admittedly, this tip makes me pretty nervous that if I calculated things wrong while adding them to my cart (or forgot about taxes), that I’d be short the cash I needed at the register and have to put things back. However, if this doesn’t bother you then I think it’s a great idea to cut back on spending!
Also - if you’re going out somewhere and know you’re not supposed to be spending money on that trip (say, getting the kids from school), just go ahead and leave all your credit cards and cash at home. Now, even if you get tempted, you really can’t do anything about it.
5. Say goodbye to social media
Study after study has shown that social media influencers have a significant impact on our lives, from our mental health to our shopping habits, which of course directly impacts our financial habits and ability to reach our goals.
We are often left to feel like if we just buy the dress they’re wearing, vacation as much as they appear to be, and go out to enough fancy brunches, we’ll be happy and glamourous, too. This just isn’t realistic.
Delete the app off your phone.
Take ten minutes a day to intentionally appreciate and find happiness where you are, as you are, and with what you have. Know that your financial goals and desire to be financially stable, independent, and free are far more important than going out to fancy dinners and brunch multiple times a week and getting likes on the ‘gram.
You won’t miss comparing yourself to others and that impossible desire to keep up with the Joneses, I promise you.
6. Separate your shopping and personal emails
If the first thing you do in the morning is pull your phone into bed and start flipping through your various social media accounts and reading e-mails, then this tip is for you.
This morning alone I received e-mails from Revolve, Williams Sonoma, Pottery Barn, and more. I read ALL of them - even though I know that I just started an expensive kitchen renovation on my new house and shouldn’t be shopping! Why do we do this to ourselves?
While you could simplify this step to just creating a folder in your e-mail account dedicated to shopping and filter certain brands to go to that folder, I say we up the ante and create a whole new email account for shopping emails. Unsubscribe from ALLLLL the brands that tempt you on your personal account and make sure to only use your shopping e-mail for future purchases. DON’T sign into this shopping e-mail on your phone - if it’s desktop only, you’ll check it less.
Out of sight, out of mind!
Oh, and, when you do intentionally go to shop, maybe you’ll get those welcome discounts again under your new email account? But… that’s not the point of this article, moving along!
7. Shop with a list
Shopping with a list is advice that will last for ages, going hand-in-hand with wisdom like “never grocery shop while hungry”!
If you don’t have a list, then you don’t have a plan. If you don’t have a plan, then you’ll be wandering through the aisles, or, as we should call it, a shopping maze designed by researchers who want you to spend more money.
What, too dramatic?
Google “store layouts to make people spend more” and you’ll find plenty of searches. I even found an article on this very subject by a well-known credit card company! I guess it shouldn’t be surprising a credit card company is trying to help businesses get us to swipe our cards more often and for a larger total amount.
While it can be difficult to outsmart millions of dollars of research designed to prey on our subconscious mind, we can do our best to counteract it. Make your list ahead of time for exactly what you need, taking inventory of what you already have at home to make sure you aren’t buying doubles (see #10 below), and then go into the store like you’re a (wo)man on a mission!
8. Check your credit card statements
Over the holidays, I slipped into “shopping” mode. Buying this gift, buying that wrapping paper, buying those festive-themed hand towels - you get the idea. On top of this, I still had debt on my rental property’s new appliances (over $3,000), thankfully at 0% interest, but still requiring monthly payments.
I realized that even though no credit card bill for my recent holiday shopping had officially come due - it would come eventually.
I decided to make an Excel sheet with ALL my debts - those due and those still pending on my credit card that don’t show up on my budgeting app - and look over it any time I was about to make a new purchase. I put my checking account balance on the other side of the Excel sheet and set up a cell where I subtracted my debts from what was in my checking account.
Being able to see this number made me really think if I wanted to add to the pile of debt with yet another new charge.
9. No spend days (preferably on the weekend!)
People trying to better their health, save money, or just cut back on animal products have “Meatless Monday” - well, I’m declaring “Skip Shopping Saturday!” (please, feel free to come up with something more catchy).
On the weekends, we have a lot of time on our hands and the appeal of Target can be just too great. Decide here and now that certain days you cannot shop AT. ALL.
If that’s completely unreasonable because it’s the best day after a long week of work to get groceries and meal prep or handle other chores, create a list of stores that you can shop at (grocery stores, gas stations, etc.) and avoid everything else.
It could be that you struggle more with online shopping during the weekend or ordering in food - decide that Saturday is your day to skip those. This tip is yours to customize and play with, make it work for you!
My only rule is, once you set the guidelines for what stores or activities you want to avoid, don’t edit it on Saturday!
It may take some tweaking to get it right, but Saturday when you’re trying to resist the temptation to shop is NOT the day to change the rules. Revisit your list of “allowed” shops on Monday.
10. Spend 10 minutes appreciating what you already have
How many times have you bought something at the grocery store - say, ketchup or eggs, without realizing that you already had it at home? Or how many times have you bought another black shirt that looks exactly like five other shirts you already own?
I know I’m guilty of that.
Before you go to the store or click BUY on that website:
Check if you already have what you’re about to buy or something pretty similar to it that would work just as well
Realize that you likely already have more than enough in your home without buying that new blouse or cardigan - you may just need to fall in love again with your old tops and jackets by pairing them with something different. Get creative and really harness that feeling of gratitude and having enough!
Thanks for reading and I hope these ten tips help you spend less and live the life of financial peace and freedom that you deserve!