At the beginning of the year I talked about the words that I want to define 2014 in my life. Those words, discipline and simplicity, have been on my mind a lot over the past month. I’ve found countless moments when I was in need of more discipline or simplicity in my day-to-day life.
Today I’m kicking off a series of posts over the next couple months focusing on simplifying daily life. Since I don’t have it all figured out (who does?) I’m not going to claim to be an expert in any one subject. I hope this series can be more of a sharing of ideas rather than a one-sided conversation. So, if you have things to add, please don’t hesitate!
Up First: Simplified Spending
For a while now, Joe and I have been wanting to simplify our spending. We’ve always been responsible spenders in the sense that we we paid off our student loans quickly, don’t have any credit card debt, aren’t lavish spenders, etc. But we’ve both felt strongly that our spending could be more disciplined. When you don’t have kids and don’t have debt, it’s easy to get lazy about tracking your purchases. However, I didn’t feel like we were establishing habits that were going to serve us well in the long run, when we do have kids and have less disposable income. Also, my heart was increasingly convicted about where our money could go, and the good it could do, if we didn’t spend it all on ourselves.
1. Track Your Finances
Our first step was to start tracking our spending to understand areas where we could use more discipline and areas where we didn’t spend as much as we thought. We’ve been using Mint.com for over a year, but it wasn’t until the beginning of the year that we got serious about tracking spending in various categories and spending our money accordingly. Tracking our spending and evaluating our budget was insightful because it allowed us to see where we were spending too much. My greatest weakness in our budget is spending money at the grocery store. Joe’s weakness comes in the form of trips to Home Depot and beers out with the guys, small purchases that add up quickly.
2. Build in Incentives
Since I’m a big-picture thinker, it helped me to have an incentive to save more money. Instead of just saving money for the sake of saving money, I had to see the bigger picture. We now have a jar in our house where we store extra cash that we’ve saved: money that we’ve made from selling clothes we don’t wear, birthday and Christmas money from family and any extra money that we didn’t spend in our respective budget categories. This isn’t something Joe finds helpful or important, probably because he works in commodities and deals with abstract finances every day, but it’s very helpful for me since I’m highly visual. This strategy also helps when I’m tempted to throw in that cute (cheap) top into my cart or buy that coffee at work when I could easily make coffee at home. Every dollar I don’t spend gets to go into a jar that pays for something much bigger and more gratifying. Imagine how many fun trips you could go on if you just stopped buying cheap clothes you don’t need! Which brings me to my third strategy…
3. Buy Quality
I’ve been known to get caught up in the quantity vs. quality trap that seems to lurk around every corner. What helped me was to look back in my closet and take inventory of what pieces are my favorites and what has been in my closet the longest. I have a dress and a skirt that I bought three years ago which were both pretty expensive. I remember having sticker shock about buying those items, but they are some of the longest lasting and most worn items in my closet. On the other hand, I only have 1 dress from Target that has lasted more than a year.
4. Take Advantage of Rewards
Credit cards with rewards are a slippery slope, but if you use them responsibly I’ve found they can be a great savings tool. I happen to shop at Banana Republic a lot because it fits my body and suits my style. I’ve had a Banana Republic credit card for a long time and have reaped a lot of rewards from it, which helps to keep our clothing spending in check. Joe’s always amazed at how I can use coupons and rewards dollars to get quality items for very little money. To get the rewards, we use my Banana Republic card on purchases we would normally make, especially bigger purchases. Just be sure you get a card that allows you to use it as you would any regular credit card, not just a store credit card.
5. Take an Emotions Inventory
Perhaps I should have started with this point, because it’s the most important, but I’ll finish with it because it’s incredibly helpful for me. When I’m tempted to spend, I’ve been making every effort to take an inventory of my soul and my emotions. Examining why I want to purchase an item or go shopping Is it because I need new dress pants for work because my current pair is worn out? Or because I feel ugly and want to boost my confidence? Those things are totally different, and it’s important for me to differentiate between the two. It also helps to curb unnecessary spending.
How do you manage finances and focus on simplicity in your spending?