Buy Now, Not Later. Keep an Eye on Your Weekly Lifestyle. Smooth Money Life
Two tiny efforts with big results to improve your money life.
Following the money life of some people, I end up raising many proposals for improvement, many points that people could do better.
When we reach a goal, we tend to think that we “got there” because we ran after many things, paid attention, organized, controlled, scrutinized details, attacked a thousand fronts, and in the end things went ahead.
It is true that in some cases we realize that something has changed. Big money movements start with small efforts.
Some small changes in our financial life are much more powerful than others. They are the ones that drive real significant improvement.
Buy now, not later
This one is so effective because it can be done on the spot. It involves no promises and not much headache.
Once you have the expenses listed (it doesn’t have to be in a spreadsheet, nor does it have to be inexpensive complex software), it can be on a notebook sheet and written down the expense.
This expense would happen anyway, so missing this money will most likely not cause any problems.
Schedule a monthly transfer to savings, in the exact amount of that expense that you have saved.
If you cancel a magazine subscription that cost $88/month, schedule a transfer of $88.
If you change your subscription TV plan from $111 to $188, schedule a transfer of $77.
It is so important that it is done now, not 15 days from now. It is not “if I have any left, I will keep it”, it is “I have kept it”.
We rely too much on our future selves. A fortnight from now we will be other people, with other priorities.
Maybe we will be tempted to cut more than one expense, but except in emergency situations, it is better to cut one at a time.
We think we know, but in reality, we have little clarity about how much each expense impacts our quality of life.
If we cut a lot of things at once and life gets bad, it will be hard to understand why.
Be aware of your weekly lifestyle
With the planning exercise done, it is easy to calculate what our weekly variable spending is.
Disregarding fixed expenses, this is the amount we would need to draw to get through a week. It usually includes expenses for transportation, food, coffee, etc.
Having this number clearly defined is already halfway, but what impressed me and proved to be tremendously efficient was to withdraw this amount, to physically carry it around in your wallet.
It is much more difficult to get lost that way. “Where” the money is coming from directly influences the way we spend.
Spending on credit hurts less than spending on debit. Spending on debt hurts less than spending on cash.
You don’t have to go too far to understand why this is so. We have a powerful aversion to loss, and this feeling is emphasized when we stage the logistics of money. The act of taking it out of the wallet hurts.
It is quite easy to test this repulsion, even.
Assume a coin toss. If heads you win $150, if tails you lose $100. Would you accept?
The vast majority of us would not, even knowing that the gain is quite significant (50%), and that the chances of losing and winning are equal 50/50.
In the quest to declare our money situation solved, we end up embracing more commitments than we are capable of meeting.
It’s a lot of change all at once.
Even the most harmless ones take energy until we end up emotionally buried and give up on them all.
It gets easier if we implement them little by little, and even better if we start with the changes that generate the most results.
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.