Unexpected perks of scaling back spending
Being selective with your finances doesn’t have to feel like a punishment
When I originally set out to write this column, I wanted to share the unexpected benefits of cutting back on my online shopping habit.
At the beginning of the year, I set a personal challenge to reduce my online orders from several times a week to a few times a month. As time passed, I realized I had fewer deliveries to track and more money left in my bank account at the end of the month. But then COVID-19 happened. And now, eliminating online shopping is more than a fad or a New Year’s resolution. For millions, cutting things out of the budget is an absolute necessity.
If you’re having to scale back on discretionary spending, here’s how to give up that financial habit without feeling deprived.
See the silver lining
The news is filled with fear, worry and sadness. But it helps to see the silver lining, says Denise Downey, a certified financial planner and owner of Financial Trex LLC, based in Spokane, Wash.
Depending on where you live, you may be forced to stop some spending — on travel, sporting events, haircuts, entertainment and more. This involuntary saving can help you make changes you wouldn’t have otherwise made on your own.
“Those decisions are being made for us right now,” Downey says.
“It’s not a matter of, ‘Do I cut the vacation this year or not?’ It’s cut. There’s no decision to be made with that.
It’s all about perspective. So, if you can, focus on the benefits. For instance, you may find you’re feeling a positive boost as you watch your bank account grow and your credit card bill stop climbing.
Get your power back
It’s probably obvious that placing fewer online orders equates to saving more money, as long as you don’t substitute an expensive activity in its place. The same goes for other types of spending. Cutting back any spending habit can lead to savings.
It can also give you a sense of empowerment, says Drew Harris, CFP, senior financial advisor at Greenway Wealth Advisors LLC, based in Charlotte, North Carolina.
“It’s a good way to gain back some control by taking ownership of our spending,” Harris says.
Cutting back means you’re giving something up. But you’re also gaining freedom from the financial stress that discretionary spending can cause.
Learn a new habit
Don’t get discouraged. Your decreased spending won’t have to last forever.
But then again, you may find you don’t necessarily want to return to your pre-pandemic spending habits. And that’s OK, too.
Take this time to learn some new habits in place of your old costly ones. Harris suggests going for a walk, talking with family and friends or finding some other inexpensive activity you enjoy doing.
Regardless of the specific substitutions you make, the changes you’re implementing during these unprecedented times will help boost your savings and emergency fund. Best case scenario, when life returns to some degree of normalcy one day, hopefully that fund is more than you ended up needing, Downey says.