I started reading The Wall Street Journal Complete Personal Finance Guidebookthis week. We’ll post a full review later on, but a line from the introduction got me thinking. “Financial practicality is more relevant to families than the best financial plan.”
I think there’s a lot of truth to that, but I think it could be better stated to say “The best financial plan is the one that’s practical for your family.” You have to make realistic, suitable changes to improve your own unique financial situation. And let’s not forget that practical is subjective. What one person thinks is practical, another will think is frivolous.
Many people try to implement financial change in their lives by setting hard and fast rules for themselves about what they will and won’t spend money on, about how and where they’ll invest. Those rules are promptly broken for a number of reasons, but chiefly because:
- They didn’t evaluate their own values.
- They based their plan on someone else’s situation.
- They left no room for flexibility.
Evaluate Your Own Values
One of the personal finance blogs I read is a little more gung-ho than most. The author talks at length about how he makes a great big pot of rice and beans at the beginning of the week and uses this as his primary meal every single day (supplemented with veggies and other foods, of course, so he’s not eating unhealthy meals, just very repetitive ones). His math is airtight — there’s no denying that he saves a ton of money on groceries by focusing on cheap bulk products like rice and beans.
That doesn’t work for me. I love the act and experience of cooking almost as much as I enjoy eating new and interesting foods. I love the creativity I can express through my cooking. I like discovering new recipes to try, even if they require buying new ingredients that I don’t keep on hand.
Rice and Beans Guy and I can both approach the topic of food and groceries from frugal standpoints. He saves money by limiting his choices to cheap bulk products. I save money by using coupons and watching sales. The difference in our approach is simply a matter of values — he doesn’t mind the repetition of his meals, whereas it would bore and frustrate me. In turn, there are elements of his life that I don’t feel are important, but he values.
Decide what things are important to you. Decide what things fulfill you. When you think about the changes you are going to implement in your life, those are the elements that you want to preserve. Scrimping and saving is useless if it makes you miserable. Instead, find ways to minimize the expense of your passions, and make your biggest changes by eliminating aspects of your life that are costly, but aren’t valuable to you.
Take a look at what elements of your lifestyle you’ve acquired merely through habit or tradition or because you are trying to conform to the lifestyles of the people around you. Do those elements make you happy? If not, why do you still pay for them?
Base Your Plan On Your Situation, Not Someone Else’s
When it comes to reducing debt, increasing income, and achieving financial independence and security, you can learn a lot from people who have already achieved the things that you hope to achieve for yourself. Those people have been through the trenches. They’ve been where you are.
On the other hand, they’ve moved past that. The decisions made by a childless person with $60,000 annual income, a reliable paid-for-the-whole-thing-with-cash car, and little credit card debt are not the decisions that are necessarily best for a single mother of two who makes $30,000 a year and has an expensive and chronic medical condition.
Decisions that are good for you in this moment may be seen as a waste of time and effort by someone with more than you. Here’s an example. There was a controversial post on /r/frugal recently. The post talked about the surveys that many fast food restaurants put at the bottom of their receipts. Fill out the survey and you can get a free burger. The post suggested that finding receipts that other people have discarded is a good way to get some food without incurring an expense.
This was a polarizing issue. Many people felt that digging through the trash for receipts or picking them up off the ground was beneath them. Some people mentioned the unhealthiness of fast food burgers. Some people questioned whether it was likely that you would have access to the Internet if you didn’t have food.
Whatever your thoughts on the topic, it doesn’t change the fact that this is a clever way to get food when you’re in need of it. Despite public perception, we do live in a society where it can sometimes be easier to get Internet access than to get food — you can find it at public libraries and coffee shops or mooch it off unsecured residential networks. Some public parks even have WIFI.
Not having enough money for food does not necessarily even mean you are homeless or otherwise lack many of the trappings of modern life. Emergencies happen. People make mistakes. If the few dollars you can save from a tactic like this are enough to help you scrape by until you can enact more meaningful change for your financial situation, then it’s a good tactic to employ, even if it’s something the mainstream American would scoff at. Use whatever methods fit your unique financial hurdles, but always make progress towards more security and wealth.
Keep Your Plan Flexible And Anticipate Upsets
Changing the way you interact with money isn’t always very easy. Habits take time and effort to break, and your resolve to break them is at its weakest when you’re stressed or hurried, or during emergencies, even minor ones. Crystal and I had a bad habit of eating out at least once a week, sometimes more than that. We were spending a ridiculous amount of money on restaurants, so we started cutting back. By September, we’d had a lot of success with our changes, so we decided to try to avoid eating out altogether.
That month, we still spent a small amount on restaurants, mostly fast food places. $3.00 here, $6.00 there. Some of them we could have avoided if we’d planned a little better. Crystal was rushing to some doctor’s appointments that kept her from coming home for lunch like she usually does, so she grabbed fast food on those days. I forgot to eat a meal before going to grocery store, so I stopped and got a burger to keep from being hungry in the store. Because we keep our plan flexible, though, none of those slip ups were a very big deal. We found savings in other areas of our life, and our changes are still working despite those lapses: our overall restaurant expenses are a tiny fraction of what they used to be.
When you commit to a change in the way you save or spend your money, you’re going to mess up now and again. Anticipate that and leave room in your plan for it. Falling back on an old habit once is not a step backwards — it’s just a brief pause before you take another step forwards. That said, be vigilant against allowing old habits to become your normal method of operation again, because that is a step backwards. When you mess up, recognize why and how you did it, and then recommit yourself to doing better in the future.