Yesterday, we talked about how to practice a skill that could earn you more money. Today, we’re going to talk about saving money — specifically, how to save money by breaking those pesky expensive spending habits.
After college, I had a daily habit of eating out. I worked evenings, so my “lunch” hour was really dinner, and the library I worked for was within walking distance of several fast food places. My apartment was just as close — I could have easily walked home and picked up something to eat. But instead, I went out to eat. I did it at least 5 nights a week, sometimes more.
That habit was costing me about $1300 a year. At the time, I wasn’t making very much money. I made enough to meet my bills, but I was blowing a substantial chunk of my income just on eating out. That’s money I could have been saving for emergencies or investing for long-term growth.
So I decided to change my habit.
Why Is The Habit Important To You?
Before you can break an expensive habit, you need to figure out what you’re getting from it. My restaurant habit wasn’t because I didn’t know how to cook (I’d been teaching myself for about a year at that point). It was because eating my meals by myself in my apartment was lonely and boring.
I was buying food, but what I was purchasing was the experience and feeling of being able to eat my meals in a place with other people.
I think the same is true of most other bad habits. People who bite their nails often don’t do it because they like the look of chewed nails or particularly enjoy the flavor of keratin. They do it because biting their nails provides an emotional response that they value.
When you decide to stop an expensive habit, examine it. What are you getting out of it? I don’t mean the actual action or behavior.
What does that action or behavior do for you? Does it sooth you or make you make you feel in control? Does it provide a chemical need your body has become reliant on, like nicotine? Is it convenient or is it something you do because you don’t know or understand the alternatives, like a restaurant habit that stems from being too busy or not knowing how to cook?
Once you know what you’re getting out of your habit, ask yourself “Is there a healthier way to get this?”
I was eating out because I was lonely and bored. To curb that, I decided to make more time to connect with friends outside of my mealtimes. I also decided that I wanted to be more ambitious with my cooking and began reading while I ate, so I would be less bored.
Replace One Habit With Another
The Renaissance scholar Erasmus said one of my favorite things about habits:
“A nail is driven out by another nail; habit is overcome by habit.”
Although a few people have the willpower necessary to quit a bad habit cold-turkey, most of us probably don’t. Trying to instantly remove a habit simply creates a void, one that is often filled by another, different bad habit. Recovering drug addicts frequently take up smoking or heavy drinking. A friend of mine quit playing the lottery. He quickly replaced it with gambling on horse races.
The good news is that you can just as easily replace a bad habit with a good one, if you make the conscious effort to develop one.
What if every time you found yourself tempted to indulge a Starbucks latte habit, you put the $5+ dollars you’d spend on it into an IRA? Click here to find out how much that investment could earn you.
What if instead of eating out every day because you’re so busy, you decided to devote a few hours one day a week to preparing meals at home for days ahead?
Should You Break Every Expensive Habit?
An expensive habit is only a bad habit if it has a negative impact on your life — if it becomes a detriment to your health, or keeps you from achieving your goals, or if it makes you feel out of control.
But many expensive habits may in fact be beneficial. A weekly martial art class can be an expensive habit, too, but it’s a good way to gain exercise, focus, and discipline — all benefits that may pay for themselves in other aspects of your life.
So long as you can afford them and aren’t prioritizing them over other necessities, these kinds of habits are often worth keeping, despite their expense. In those cases, simply incorporate them into your budget, so they don’t get neglected. Don’t forget to look for deals and discounts, too.
Put Your Savings To Good Use
When you break this bad habit, you’re going to find yourself with access to more of your money. Make sure that money gets used well. Remember, we broke this habit because you were spending money on something that wasn’t beneficial to you — don’t throw that money away on a TV or a new phone or any other purchase that won’t have a positive impact on the growth of your wealth.
You could use it to create your first emergency fund, or to save up to attend a professional conference for your field of work. When in doubt, a contribution to a retirement investment or throwing a few extra dollars at your debt is always a good move.
Tomorrow: Discuss Personal Finance With A Friend
For many people, finance is a private and taboo topic. That is unfortunate, because it isolates us from others who may share our experience and be able to sympathize with our struggles with money. It isolates us from good mentors and prevents us from mentoring others. Tomorrow, we’re going to take a step towards changing that.
What are your expensive habits?
Do you have any bad spending habits? What steps have you taken to cut back on them? Have you replaced any bad habits with good ones? Tell us in the comments!
Photo by Luciano Belviso.Click here to read Day 9!