I’ve mentioned before how I’m a recovering spend-a-holic. In another life, I spent to my heart’s content, undeterred by any financial damage it would cause. I wrecked our ability to save and follow any semblance of a budget.
My wife and I would have frequent “discussions” about
our my spending patterns. The discussions were mostly one sided, with me downplaying the extent of our my struggles. I got so good at deflecting any negativity about our my poor spending habits that I usually ended up getting what I wanted at the end of those conversations. Kudos to my wife for putting up with me…I was a mess.
Clearly I had convinced myself there was no problem.
It’s very easy for spending to spiral out of control. Much of the time, we do damage simply by not developing a system of checks and balances to monitor what’s going on. We end up waking up one day with a mess on our hands, wondering how we got there.
The biggest step that had to take place for my spending habits to change was a shift in my attitude. Thankfully for me, that did take place through a series of well-timed events that occurred at a point when my mind was open to improvement. Only after I willfully chose to get my act together and develop some discipline could my wife and I move forward with some strategic practices to curb spending.
Two such practices we implemented proved valuable for us. Those were setting price limits on spending and following the 24 hour rule.
The price limit rule goes something like this: “If the cost of the purchase of any one item is over $______, I’ll talk to my spouse (or accountability partner if single) before I buy it.”
A couple of things I really like about this rule:
It brought my wife and I together ahead of time (before the purchase) as we communicated on what the specific dollar amount would be. Communication in a relationship is always a good thing.
It allowed for freedom to spend up to the agreed on limit, providing the budget still allowed for it that month. That freedom was especially important to me being the natural spender in the relationship.
It capped what I could spend without consulting my wife. This was a great assurance to her, being the one setting up the budget and more concerned about saving at the time.
The price limit rule varies for different people. What’s expensive for me might not be for someone else. Each person or couple will have to set their own limit based on their comfort level.
Another point is that the limit can change over time. Ours has gradually gone up through the years as we’ve developed a better handle on our finances.
The 24 Hour Rule
Those who follow the 24 hour rule set this standard: “Do not commit to big purchases without sleeping on the decision overnight.” I highly recommend this one because of what it will stifle – our emotion.
I would say most of our big purchasing mistakes happened because we were swept up in emotion. We became so excited about making a purchase that all logic and reason went out the door. All we could think about was having that new, cool thing in our living room, or parked in the driveway or being swung out on the driving range.
I heard the saying somewhere “Most accidents happen on the showroom floor.” Translation – we screw ourselves financially at the buy. That was us, with many different types of purchases.
Sleeping on a big decision overnight allows the body’s excitability levels to return to normal. It removes us from the store where buying pressures are at their highest and gives us time to think about it a little longer. We noticed that, on some occasions, we chose not to buy that item after settling down and giving it some further thought.
Price limits and the 24 hour rule may seem restrictive, especially for those like me who love to spend. To counter the straightjacket feeling, my wife and I instituted one last practice we like to call “blow money.”
Each month, we allocate a certain amount to our blow money budget category. Each of us receive a certain amount of cash to spend on whatever we like. It’s not a great amount but enough to be worthwhile and last the month if used judiciously.
No accountability for it. No checking with the spouse before spending. No pressure or expectations on where it’s spent.
I love it! And so does the more frugally conscious Mrs.
Once we started this, I found that by freely being able to spend a little on whatever I choose, I was less likely to spend a lot on big-ticket items. It’s as though my craving for spending had been satisfied in the little purchases. Sounds odd but that’s how I felt.
The fun thing is, now that my habits have changed, most months I don’t even use my blow money. But I still get to keep it, and I get more at the beginning of the next month. Several months of non-blow-money-spending and I’ve accumulated a nice amount that could be used for a bigger purchase.
And under the blow money standard we’ve set, I don’t even have to follow the price limit rule or the 24-hr. rule to make that bigger purchase. Nice! (Although I probably would simply out of courtesy and my new found discipline.)
These three practices, along with sticking to our budget, have helped us curb our spending. Consequently, the by-product of spending less is that our savings rate has skyrocketed. I’ll take that any day.
Questions: What is your system of checks and balances to curb spending? Do you have a 24 hour rule on a big purchase? What’s your upper price limit on spending before you would have to discuss the purchase with your spouse?