One of the biggest mental obstacles that most people face when it comes to turning around their financial life is the perception that if they cut into their spending, they’re going to reduce their quality of life.
Typically, a person’s mind flashes to the non-essential things that they care about most. So, for me, when you talk about cutting spending, I imagine cutting into my hobby spending. I imagine cutting into my quality food spending. I imagine cutting into family vacations.
To tell the truth, that’s a pretty unpleasant vision. Those are the things I care about in my life. I don’t want to cut them out. I don’t want to lose those things that really bring a lot of joy and value to my life.
Most people who consider cutting their spending go through a similar thought process. Their mind immediately flashes to the things in their life that they spend money on that bring them genuine lasting value and joy, and unsurprisingly they don’t want to cut that. Thus, the prospect of spending less seems like it directly leads to a lower quality of living and thus misery, and thus people often avoid frugality or enter into it with severe trepidation.
Here’s the catch: if I’ve learned anything from our own financial turnaround, which led us to being debt free with a paid-off mortgage by our early thirties and well on our way to early retirement as soon as our youngest leaves the nest, it’s that cutting back on your spending is really ineffective when you cut the core things you most care about, but it’s brutally effective if you aim it at everything else. That’s the secret of frugality – cut back on the things you don’t care about, don’t expand your spending on the things you do care about, and the leftover money will make a huge difference in your financial state without reducing your quality of life one bit.
That sounds simple enough at a glance, but it’s actually got some pretty serious pitfalls.
First of all, it requires a strong sense of what things you actually care about and which things you’re spending money on out of routine or to impress others or from bad advice or from media influence. The things that you really care about are worth spending money on. The things that you spend money on because it’s just how you do things or because you want your friends to be envious or because someone suggested it to you or because you heard about it on social media or the news are not worth spending money on, because they contribute almost nothing positive of value to your life.
The trick is to distinguish between the two groups, and that’s harder than you think because those things that aren’t worth spending money on often do give you a little momentary burst of pleasure, and we do remember those bursts. We end up associating that burst of pleasure with it being a “good” thing. The catch, of course, is that lots of things give us a little momentary burst of pleasure, and many of them don’t require us to spend money. I get a burst of joy when I’m working and my wife walks by me and puts her hand on my shoulder for a moment. I get a burst of joy when I’m done with my work an hour early and can curl up for a few unexpected chapters of a book. I get a burst of joy when I’ve been hiking for an hour and reach an amazing vista. I get a burst of joy from making a really good family dinner and savoring that first bite and seeing my children dig into it.
Life offers us so many little bursts of joy for free that it’s silly to pay for more of them. Instead, we should save our money for the things that are more deeply meaningful. Often, they provide a burst of joy, but some element of it lasts and lasts over time because it’s tied to something that we truly value.
So, that’s our challenge, laid bare. The real key to spending less without reducing quality of life is to spend money on things that bring lasting value into our life while not spending (much) money on things that are merely little bursts of pleasure and instead finding those mostly for free. The closer we can get to that ideal, the less we spend while maintaining the same quality of life.
That dividing line is different for everyone. The line between the things in my life that are really worth spending money on versus the things that really don’t matter to me is different than your line between those two groups.
Thus, I can’t actually suggest to you which items are on which side of the line. All I can really share is how I went about (mostly) figuring them out and putting that knowledge to work.
One thing that helped me was to cut certain types of spending out of my life entirely and see how I reacted to that. Quite often, once I was able to adjust my daily routine a little bit, there was no real lasting impact. I found that cutting off regular coffee shop visits didn’t really alter my quality of life. The same with regular book store visits. Those were things that I felt pretty confident were “core” things that really mattered to me, but by cutting them out and finding a somewhat different life routine, I learned that they really didn’t matter that much. I use thirty day challenges for this, meaning that I do it for thirty days and evaluate the results afterwards.
Another thing that helped, and this might seem strange at first, was to reorganize my schedule so I could spend more blocks of time on my hobbies. Often, I find that when I’m passionate about something but my schedule doesn’t afford me the time to explore it like I want to, I throw money at that passion. If I’m really missing playing board games and I don’t have a window to play, I’m more prone to spend hobby money on a board game. It’s a “substitute” impulse because I don’t have time for the thing I really want. Giving blocks of focused time to my hobbies takes away that “substitute” impulse.
Another strategy is to consciously go through every bit of your spending and trim spending on things that are obviously unimportant. For example, I switched almost all of my food staple and household staple buying to store brands because, honestly, my quality of life is not tied to whether I buy name brand hand soap for the bathroom or whether I buy name brand sugar. I negotiated for better insurance rates and shopped around for better policies because my quality of life is not tied to what my insurance carrier is. I eliminated our satellite service because I realized that the content on there wasn’t really adding to my quality of life in a world where much content is available elsewhere.
If you find yourself regretting something you cut out of your spending, don’t hesitate to bring it back. This follows the same principle as any significant life change – if it’s making you feel miserable, dial it back. You’re far better off finding a more moderate change that makes you feel good and empowered than a radical change that you’re going to eventually fall back on. Don’t view this as a failure or a loss. Instead, view it for what it actually is: setting yourself up for sustainable long term success.
My final suggestion is to recognize that not buying something is often more empowering than buying something. Spend the money and it’s often just a burst of joy that’s forgotten quickly. Keep the money and it actually becomes something, a piece of the life that you want to be leading. At this point, I’d almost always choose the little piece of the better life than the quick treat I’ll forget about tomorrow, but it took me a long time to genuinely begin to feel that way. Just remember what not spending actually means – it’s a genuine step toward your goal, especially if you use that money well by throwing an extra $5 toward debt repayment or an extra $20 into savings. That’s empowering. That feels good in a wholly different way.
Remember, the quality of your life doesn’t have a whole lot to do with spending. There are many great things in your life that don’t have a financial cost at all. Don’t spend your money chasing the things that aren’t great; rather, use that money so you can find even more greatness.