Little Things: The Spending Edition

I began improving my finances by making big modifications like mortgage refinancing, structuring savings allocations and reducing recurring expenses. These actions made a colossal impact on my financial picture and provided a sense of accomplishment. The next step is taking a microscope to my budget by looking for opportunities to make minor improvements under the expenses section.

Separating wants from needs allows the creation of a spending plan based around the most important values. Summit’s website offers helpful on-demand webinars on topics like taking control of your finances and a guide to mindful spending. Here are some of my thoughts when it comes to reducing spending:

• View credit cards like debit cards. I pay with credit cards whenever possible to earn cashback rewards, but it can be easy to use that as an excuse to overspend. To avoid paying interest, I only use a credit card if the funds are already available in savings. When I swipe the card, I transfer that money from savings to checking so the funds are allocated and the bill is paid in full each month.
• Make conscious daily decisions. For instance, it’s easy to buy an overpriced snack during a stressful workday and doing that can be costly, if done often. Assessing the cause of the feeling can help. It may be more appropriate to step away from the work area, take a walk, chat with a friend or do a breathing exercise instead.
• Save to splurge. Purchasing a “want” from time to time is understandable, but to control spending, a technique is to simultaneously put an equal monetary value in savings. That $4 coffee shop latte would then “cost” $8, which may affect the desire to splurge.
• Convert dollars to time. Using the hourly pay rate to find out how long it will take to earn an item is another good way to decide if you really want to purchase it. As an example, if you make $15/hour and want to splurge on a $90 dollar pair of shoes, that’s roughly 6 hours of time.

As the saying goes – show me your budget and I’ll tell you what you value the most. While forming my budget, it was unsettling to see the large amounts of income going to things that don’t give me joy. Viewing my income, spending and values as a financial ecosystem, Project Money is helping me create a strong dynamic equilibrium.