Buzz
As we all know, the secret to saving is simple: spend less than you earn. But when there are so many tempting options, how can you control your spending?
Trent Hamm, over at The Simple Dollar, shares his approach to spending and saving: 'Be extremely frugal on the things that don't matter to you, while spending thoughtfully on the things that do.'
But how do you determine what truly matters to you? Whether it's books, vacations, high-end products, or even something as mundane as toilet paper, how do you choose where it's worth spending a little extra?
Some choices are clear, even if they don't align with the typical splurge advice from society or personal finance experts. For example, like Hamm, you may not care about fancy meals, so spending on food doesn’t excite you. On the other hand, you might really enjoy indulging in high-quality ingredients or dining at upscale restaurants.
If looking your best is a priority, investing in shampoo/conditioner that suits your hair, makeup that doesn’t cause breakouts, and high-quality lotion could be worthwhile. If these are your values, it's not unnecessary, despite what many personal finance websites may say.
So, how do you figure out where you're okay with cutting back? Hamm offers some advice, but the one that stands out is being flexible with yourself. You don’t need to make firm decisions on what to spend and what not to spend right away—you can try different approaches to spending and discover the balance that works for you.
One way to start is by conducting a spending audit. Hamm suggests:
Take a seat with your monthly credit card and debit card statements. Go through every single line and ask yourself one question: 'Was this expense truly worth it?
If you can’t quickly answer with a confident 'yes' and provide a clear explanation, you should strongly consider eliminating that expense moving forward.
By doing this every month, you'll uncover spending habits that you can work on eliminating. 'I might notice I had a series of small expenses when visiting family, all of which were forgettable,' Hamm writes. 'Why didn’t I just bring a bag of food with me and save around 75% of that cost?'
Here’s a personal example from my life: I adore raspberries, but always considered them a luxury, given they cost around $4 to $5 per container in New York. However, I recently realized it’s not such a significant expense when I buy two or three containers weekly, especially when considering the junk food they replace in my diet (one of those purchases Hamm refers to) and the joy they bring. Yes, they’re somewhat expensive, but they provide more value than they cost. Some people—probably many in the comments—might view them as an unnecessary expense, but to me, they’re worth every penny.
Alright, raspberries are now justified, but what about that junk food? I can eliminate that and check back next month to see if I genuinely miss it (likely not). However, as Hamm notes, 'Typically, if I’ve cut something too drastically and regretted it, it’s because that reduction impacted something else important to me. Perhaps it hurt a friendship, or maybe I unintentionally cut out a hobby or an area of my life that really matters, even if it wasn’t obvious at first.'
When you realize you've overcut, you can think about what value you've lost and reintroduce it. 'Reflecting on a poor spending decision until I truly understand why it was a mistake usually helps me adjust my spending habits for the better, reducing impulsive errors over time,' Hamm writes.
Instead of spending on things that don't truly matter to you, save for what you genuinely value, whether that’s premium shampoo, raspberries, or a little extra in your savings account. Enjoy your money.
