I’ve been re-reading YMOYL and love the chapter on analyzing your spending emotionally.
Step 3 in Vicki Robin’s book focuses on mindful spending and saving, rather than following a rigid set of rules like a budget or what society has deemed to be normal spending.
Does Spending On The Item Bring Actual Happiness?
You need to identify what you actually need versus spending on things that don’t actually make you happy. If it doesn’t make you happy, why are you actually doing it? I’m guessing because of habit.
YMOYL concentrates on being mindful of the psychological reason why you spend money, realizing when you do so, and finally weakening and eliminating that urge over time.
In essence, you’re doing this chain of reactions:
Cue ——> Routine —–> Reward
It’s called the Habit Loop, and it was popularized in the book The Power of Habit.
We can use this technique to curb our spending by analyzing our behavior. For each thing you spend on, ask yourself what the cue was.
Do the below actions sound familiar for impulsive spending?
- Ordered Seamless because you didn’t meal prep on Sunday, so after a long day of work you got lazy and ordered takeout.
- Bought a coffee because you were restless at 2PM instead of just going for a walk around the park.
- Went shopping because you had a bad day and wanted to make yourself look pretty.
How Do You Stop Your Impulsive Spending Habits?
Step 1: Figure out what the cue for your spending is. Emotions that could cause spending consist of Anger, Boredom, Hunger, Laziness, etc.
For most of the day you can resist these emotions. Fresh out of bed for the day, you can ignore the sizzling bacon and then the whipped cream blended drink when you’re on a diet. As the day goes on, your willpower wanes and you consider eating something delicious but unhealthy. The same analogy applies to spending. Your brain’s willpower muscle can resist spending for most of the day. Once you’ve used up your willpower muscle, your spending brain starts to come out.
There have been studies on how willpower is actually a mental muscle and that it gets weaker as the day goes on. It’s why you’re most likely to get a sugar craving and go online shopping late at night. You’ve had a hard, long day at work and once you’ve gotten home your willpower muscle is probably all used up. Prepare your evenings in advance so you’re not spending money once you get home.
Step 2: Replace the current routine with another one.
If you find you’re spending money at certain times of the day or after a certain event, prepare another routine in advance so you can replace your bad spending habit.
If you’re spending money every night ordering food, start cooking on Sunday and meal prep so you can have food for the entire week.
If you’re getting coffee every day at 2PM, consider bringing a thermos to work for much cheaper coffee you’ve pre-made at home.
Step 3: Track the number of days with a good habit so you can keep the habit.
Keep track of every day you’ve managed to not do the bad habit. It’s said that 28 days is how long it takes to create a new habit, so keep on it for 28 days! Print out a calendar for the next 28 days and cross out each date you’ve managed to keep a good habit.
Non-Impulsive Purchases: The # of Hours of Work Needed To Purchase It
Another way to change your mindset of spending is to figure out how many hours of work you’ll need to purchase something.
You’ll need to calculate your actual hourly salary. People often overestimate their hourly salary because they don’t include the time to commute to their job. They also don’t factor taxes into their salary. You don’t get paid 100% of your salary — a large chunk is taken out due to taxes.
Hourly Salary = ((1-Tax Rate)*Salary)/(hours worked + commute time)
For example: If there are Bruce Springsteen tickets that are $150 and you make $16/hour with a 30% tax rate, is it worth nearly 13 hours of work to watch that concert?
There’s no right or wrong answer, as long as you are aware of how many hours you’ll have to work to pay for an experience or object.
Here’s a quick calculator to see how many hours of work are necessary for your next big purchase!
Do you have any other good tips for cutting spending? Have you ever read YMOYL?
If you haven’t entered the giveaway for a copy of Your Money or Your Life + The Power of Habit, you can click here to enter.
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