From Emily Rienhardt, blogger for Mid American's Money Matters finance blog.
Living happily with less. Do you think you can do it?
Our society has really encouraged this “have it all, and get it fast” mentality, I think it’s easy for us to feel like we don’t know how to minimize and live with less and still feel happy. We’re told we will feel happy with MORE and RIGHT NOW that it’s easy to get carried away with keeping up. It makes us forget about the things that should take priority in our financial lives.
This idea of drastically cutting back is particularly important if you’re currently living paycheck to paycheck and you’re having trouble making ends meet. Or if you’ve lost your job. Or maybe you’re trying to cut spending to meet a certain short term goal – like paying down your debt, or a down payment on a house, or a baby on the way. OR maybe you’re working towards your dreams, like opening a small business or early retirement. Whatever your situation, making a few big cuts can help.
Massive cutbacks in several areas of your life can feel overwhelming, but it can lead to new discoveries about yourself and your life that you may not have found otherwise. Here are some areas to focus on and some ideas of how you can really cut back and live with less.
Cut the convenient, unnecessary spending. This means spending money on clothes, shoes, jewelry, makeup, home decor, convenient taxi rides, music downloads, video streaming services, vacations, electronics, getting your hair cut…the list goes on…it’s a lot!
Learn how to get comfortable without the middle-class comforts you’re used to. If you’ve been laid off, or suddenly finding it crucial that you make some changes, don’t give yourself a grace period to “ease into” a new normal. Start it right this moment. It’s easy to resist abrupt cutbacks when you’re suddenly faced with a big life adjustment. You need to make the necessary changes as soon as you can so that you won’t get yourself into a more serious situation. Even if you’re getting ready to go to an interview, try your best to resist the urge to overspend on a new look, or even a new outfit. Hit up some consignment stores, or borrow a nice outfit from a friend. Try to think about what you already have, and what you can get away with never buying.
If food has been a big part of your budget, cut it down. Maybe your job allowed you to go out for meals on a regular basis before you were laid off. That will need to change. And it should change if you’re trying to save up for something or cut down your debt too. There are a lot of benefits to retraining yourself to cook at home and eat a little bit less. Your older clothes from your “skinnier days” will start to fit you. You can set a daily, automatic withdrawal from your checking account right into your savings account with the the amount you would normally be spending on lunches out with coworkers, or dinners out on the town. It’s easy to feel like your social life changes drastically too when you have to cut back on some of these fun outings. That doesn’t have to happen! Get your friends on board (they could stand to save a little money too, couldn’t they?) and find ways to get together without compromising on fun and friendship. Grab a group of close buddies and coordinate a weekly night where you could all get together and cook a good meal, one where everyone is contributing something so that no one feels the brunt of all that cooking. Even people who aren’t really forced to cut back on their spending will appreciate saving a little bit here and there. You could still allow yourself 1 or 2 nights a month (if you can swing it) where you go out with some friends. Something I try to do is only eat half of my meal when out with friends. And with my leftovers at home, I add my own rice or quinoa to make the leftovers stretch even further, sometimes into two more meals if I’m really strategic.
Cut the costs of housing. An obvious solution to cut back on what you spend on rent or your mortgage is to live with other people. If you can, look for a roommate or someone to split housing with. Whether living with friends or a new acquaintance, work up a rental agreement that you are both comfortable signing. Living with other people can be tough, and getting wrapped up in the wrong living situation can make a financially stressful period of your life even more stressful. Becoming a house sitter for friends, family and acquaintances could lead to a nice trade of services. Whether short term or long term, put it out into your circle in the universe that you’re looking for this type of work and perhaps a longer opportunity could present itself. My friend once housesat for a couple who were traveling overseas for almost a year. They worked out a great deal that allowed my friend to live rent free for nearly 10 months! This is another situation where a written contract could help smooth over any potential hiccups down the road. Perhaps you have doting parents that would just love it if you moved back in with them for 6 months or a year. It’s not the life you dreamed of, but it could really open up your finances for substantial savings, even if just for a shorter period of time.
Find your biggest motivator for a financially comfortable life. Keeping your eyes on the prize is a healthy mentality for accomplishing something big. Maybe you’re already living with 4 roommates and your biggest motivator is getting your own place. Or maybe that business you’ve always dreamed of is getting closer than you imagined. You might be closer to buying that house or killing your debt than you think! Keep the momentum going, stay on track, and don’t allow yourself to get pessimistic about your current situation. This doesn’t have to last forever.
If you felt the need to make a massive cut tomorrow, where would you start?
For more articles on personal finance, visit Money Matters