As a financial writer I spend most of my day checking out blogs, news stories and ‘how to articles’. Not surprisingly, with the vast majority of content online these days, all the advice gets to be repetitive. So I have compiled some common advice from the web and explained why I proudly do the opposite.
I will admit the inspiration for this week’s column came after I read an article titled, “5 expenses to cut when you’re 30.” I haven’t reached the big 3-0 yet and began to think about my own spending habits. I realized that while I am in my 20s and don’t have the responsibilities of children or mortgage payments, why feel shame for spending money on new clothes or coffees in the morning?
To start off, I guess you should know a little about my financial situation: I am on a pretty tight budget considering I live in NYC, I am not in debt and am generally good with my finances. I have room to improve in future planning, I have not started a retirement fund or invested in anything.
Spending Money at Coffee Shops
This is something I struggle with, honestly I probably would spend WAY MORE at coffee shops if I had a large disposable income.
Why it’s bad: On average I buy one $2-$3 coffee a week, occasionally this number will get up to four a week. If I consistently bought four coffees a week for an entire year I would be spending: $624 a year — ok woah!
Why I don’t feel bad: I love coffee, I may even be addicted to it, every Saturday I buy one cup and spend hours at the coffee shop; writing, reading or just hanging out. I have a strict ‘once a week’ rule with space for special occasions; i.e promotions, travel pick-me-ups, my birthday or dates.
The reason I rationalize my one cup a week rule is because I get free coffee at work. Luckily, at the MyBankTracker.com office we completely embrace coffee addictions. By holding out until I get into the office I save about $9 a day or over $3,000 a year.
Going Out To Eat
First off, my kitchen — if you could call it that — is more for show than anything else. Second off, to my moms horror, I don’t cook.
Why it’s bad: Everyone knows that going out to eat is far more expensive than eating at home. Did you know that you can save over $100,000 in a lifetime by bringing your lunch to work in a paper bag?
Why I don’t feel bad: Similar to my coffee reasoning, I enjoy dinners out. I love catching up friends while eating food I will never be able to make. Although there is no set pattern to how much I eat out, there is a set pattern for how much I eat in.
I never go out for lunch at work, and rarely eat breakfast out (breakfast is actually one meal I can cook — cereal anyone?). When it comes to eating dinner out, I usually go for birthdays and other celebrations. I wait for my friends to suggest it if we are getting together. These rules are pretty simple at let me justify eating out when I do choose to.
Going on a Shopping Spree
I am not a big shopper. I hate stores, I hate lines and most of all I hate trying on clothes. That being said, when I do go shopping I totally splurge.
Why it’s bad: Everything in moderation right? When you are spending a lot of money shopping you may be picking up purchases you don’t need. How long has that sweater been in your closet? The key to going on “Shopping Sprees” is to not buy things you won’t wear.
Why I don’t feel bad: As I mentioned above I rarely go shopping. I wear things until they fall apart (thank goodness I work in the web industry), but as I get older and become more professional I have realized a need to take care of my appearance.
I have a rule that nothing can be in my apartment unless it has multiple purposes, I try and do this with clothing as well. My whole justification of spending a lot is to make sure I am investing in my wardrobe because I rarely shop. Be sure to buy clothing you can invision wearing to work, out, or with multiple combinations.
It’s OK to Spend Money
As with anything in life there is a happy medium. The way I see it, in a few years I will not have the time and energy to meet friends for dinner, or steal away to enjoy a cup of coffee alone. It’s important to save, but when you do decide to spend, do it purposefully.
So many people limit themselves from enjoying the small things in life because there is this big guilt attached to spending. It’s true $30-$40 here and there adds up.
Don’t feel guilty when you spend money on yourself, but learn how to justify your purchases. If you love getting sushi for lunch on Wednesdays that is fine, but how are you saving in a different way?
Most importantly, you have to work on getting your finances in order. If you do have a lot of debt, you really shouldn’t be buying yourself “presents” here and there.