I started a new job with an office, coworkers, and a commute. Previously, I worked from home in my pajamas, blissfully ignorant of the many shopping temptations that accompany an office job.
Working outside the home I found…
- Lots of opportunities to buy food and drinks.
- More consumer products, fashion, and gadgets. Hmm, that Kindle is smaller than mine and looks cooler. Should I buy new work clothes like those?
- More opportunities to shop. I can easily shop on my way home or walk to a store during lunch.
- Thoughts of grabbing dinner on my way home.
And finally, I felt compelled to buy something on my way home Friday. You know, as a reward for a job well done at the office.
In the end, I didn’t change my spending habits this week. But I can see that it’s easy to spend when you’re exposed to so many products and stores.
What do you think? Do you feel more compelled to buy things when you work outside the home?
I overheard the following comment in the locker room today:
“I like to shower here because of the unlimited towels.”
Unlimited towels? At the pool there are stacks and stacks of towels, but I never thought of the towels as being unlimited. This comment got me thinking about frugality. For me, frugality is not about clipping coupons or choosing the cheapest option (especially if the cheapest option is not built to last).
For me, frugality is my quest to consume less.
When I see a stack of towels, I take one because that’s all I need. I don’t think towels are unlimited. Instead, I think resources are limited and need to be conserved. I avoid using disposable products like paper cups and plastic bags at the pool, and I don’t take long showers. I’m not perfect, but I try to consume as little as possible.
However, now that I think about it (ah, this is good) the best choice is to bring my own towel to the pool. This way I can use my towel several times before it’s washed.
How about you? Are there places in your life where you can consume less?
Personal finance advice often tells you what you can’t or shouldn’t do. For example - if you want to retire someday, you shouldn’t have daily lattes or lunches with your buddies.
However, the tight fisted don’t spend money approach is not always successful. Like a diet or an exercise plan, you may jump in, cut spending, burn out and return to your previously scheduled program of spendorama or consumerfest. Why? Because consumerism is ubiquitous and going cold turkey can be difficult.
Ramit Sethi of I Will Teach You to Be Rich fame (book and blog) has a different spin on personal finance. Ramit doesn’t suggest going cold turkey with your spending. Instead, he encourages you to spend money on the things you love, but cut costs mercilessly on the things you don’t.
Reduce your spending in two categories
Ramit suggests you pick the two categories where you spend the most money (for example, food or entertainment), and over the next six months cut your spending in these categories by 25%. The cut isn’t huge, it spans a long period of time, and because it’s an area where you spend a lot of money, you will save money.
Personal finance doesn’t have to be about will power, but it is about choices.
The Spend Less Than You Earn rule works for me, but I’m a saver. It’s in my jeans genes.
How about you? What personal finance strategies do you follow? Envelope system? Pay yourself first? Automatic deductions?
Trent Hamm over at The Simple Dollar started a new series summarizing his money and life principles. First in his series is a great rule that I follow with fervor: Rule #1: Spend Less Than You Earn. Hands down, this is easiest way to get control of your finances and get on a path of peaceful saving.
After reading Trent’s post I thought about why I find this rule easy to follow. Here’s what I came up with:
Why I Find it Easy to Spend Less Than I Earn
- Peace of mind. I’m a saver and I prefer not worrying about money. I’ve learned first hand that employees are expendable, but I don’t worry about losing my job because I have an emergency fund.
- I’m saving for my kids’ education. I’d love for my kids to get college scholarships, but in case they don’t I save.
- I love working 30 hours a week. I limit my spending so that I can work less. I enjoy picking up my kids from school and spending the afternoon with them.
- I don’t need to spend money to be happy. Some of my best weekends are spent with my family doing free stuff or digging in my yard. The three things I used to spend money on are books, plants, and music. The library and the Internet are great resources for music and books. Pandora Internet Radio streams free music; it’s like a radio station without ads. And plants are everywhere and don’t need to be purchased, because gardeners love to share their wealth. I mainly spend money on social experiences, like concerts and events.
- I’d like to retire someday. Someday I’ll retire and spend my days reading, writing, and photographing my view of the world.
- I really don’t need any more things. If anything, I need less. I get great satisfaction from removing things from my home, not adding them.
All of these reasons make it easy for me to spend less than I earn.
The Get Rich Slowly blog offers this formula:
[WEALTH] = [WHAT YOU EARN] – [WHAT YOU SPEND]
As mundane as it may sound, the way to build wealth is to spend less than you earn.
How about you? Do you spend less than you earn? Do you find it easy? What are your motivations? Please leave a Comment.