my 2 cents
Personal finance columnist Charlotte Cowles asks nosy, revealing, and sometimes uncomfortable questions about money so you don’t have to.
Photo illustration: by The Cut; Photo: Getty Images
I’m a nurse who does a great job at a hospital in Manhattan. I’m making more money than I’ve ever made (about $120,000 plus overtime). After spending many years in the small Midwestern city where I earned my degree, I’m excited to live here. Overall, my life is great. I have an apartment that I love, have good friends, and do fun things like traveling and going out on the weekends, and I’m enjoying life as a 28-year-old. I don’t want kids so I don’t feel any pressure to “settle down”. But recently, I realized that my spending was catching up with me. My rent has increased by $100 a month this year ($2,900 total per month). This is manageable, but still a significant amount. And when you check your credit card bill, you’re left with millions of $40 or $150 pieces of paper that you can barely remember.
I’m not in financial trouble. Most can afford to pay their bills. (I have a large student loan bill. I’ve never missed a payment, but sometimes my credit card bills suffer because of it.) I don’t have much savings, and that worries me. I’m doing it. I wish it didn’t feel so cramped and difficult to maintain. I’ve tried to stick to a budget before, but I just can’t seem to manage it. Looking back at my early 20s, I lived with almost nothing. I don’t miss that lifestyle, but I do miss how self-sufficient I was and how little I needed. How can you reverse some of these lifestyle habits so you can save more?
Lifestyle changes are made up of small, imperceptible upgrades you make as your income increases. You’re getting a raise — congratulations! — So you try a slightly more expensive moisturizer, take an Uber or three, and you’re better off paying $32 for a workout class at a dirty basement gym you’ve never been to. Turns out it’s really better. Eventually, you’ll move into a more expensive apartment, opt for a meal subscription service, buy a new car…the list goes on.
These choices aren’t necessarily bad, but they add up. Add inflation to the mix, and suddenly it feels like your money is disappearing, even though you’re making more money than ever and aren’t doing anything extravagant.
The worst thing about the lifestyle is that it’s hard to get back on track. Maybe you were perfectly happy without grocery delivery for the first 25 years of your life, but now you feel like you can’t live without Instacart. Or your well-paying job encroaches on your meal prep time, so you spend a lot of money on takeout and have no idea what you’d eat otherwise. Or your friend always wants to go out to dinner, so you go together to spend time together. Lifestyle creep is more than just endlessly rewarding yourself. It may feel fun and luxurious at first, but it quickly becomes a habit. You are using this money just to maintain your standards.
The first step to combating lifestyle creep is recognizing that it’s happening in the first place and that there are ways to stop it. How can you put on the brakes in a way that gives you more control and doesn’t feel like a downgrade? I’ve talked to several people who have successfully reversed their spending hamster wheel and kept their spending at bay. . Here’s how they do it:
About 10 years ago, I spoke with financial coach Mallory Baska, who was in a similar position as you, and she made a decent amount of money but quickly spent it. I said it helps to have a strong motivation to change. Her reason was simple. I was being harassed at work and had to quit my job. “I felt trapped because I couldn’t afford to leave the house,” she says. “I prioritized material goods over my own financial security, so I had no choice but to return to this terrible environment every day.”
I hope your situation doesn’t turn into this (or worse). But above all, be clear about why you want to improve your financial situation. Your reason doesn’t have to be too small or mundane, but it does need to be compelling to you. Otherwise, you won’t stand a chance against temptation with a new sweater, a weekend getaway, or whatever your kryptonite is. Once you choose your motivation, create reminders to keep you on track. (I recently took a photo of my overstuffed closet and look at it whenever I want to buy more clothes.)
It also helps you save up for certain things. “Rainy Day” isn’t very inspiring, but if you can picture what you really want, keep it in mind. When my friend decided she needed to cut back on her spending, she renamed her account based on her specific goals. For example, put the down payment on your dream car into a “vroom vroom” fund. “Small changes in language can make saving money feel like a joy rather than a sacrifice,” she says. These goals can change over time, but they can be fun. This doesn’t have to be a struggle.
Okay, this part might be awful, but bear with me. You will need to review your invoice line by line. It may be a crime scene, but you can’t move forward until you examine the evidence and know where you stand.
Manisha Thakor, certified financial planner and author of Money Zen: The Secret to Finding Your Enough, recommends what she calls a “fun audit” of your spending. “Go through all your transactions and highlight the ones you enjoyed the most,” she says. “The goal is not to deny yourself, but to become more aware of what actually satisfies you and what doesn’t.”
Initially run this audit weekly. You’re basically managing your money like Marie Kondo. Throw everything away, sort it out, and decide what you’re going to continue doing. Sure, paying your phone bill may not be a joy, but learning to get rid of things that no longer really add value to your life (so many subscriptions!) makes the process easier. and perhaps even satisfaction. This practice is often referred to as “money dating.” Designate a special time, light some candles, grab some snacks, pour some drinks, and have a great time. Once you have a better idea of where your money is going, you can move it up to once a month or so.
Please quit Amazon Prime. Delete your credit card information from your phone and internet browser. Try a no-spending month or a shopping ban. Move to a cheaper apartment, neighborhood, or city. These are just some of the tactics people have shared with me when I ask them how they’ve managed to sneak their lifestyle into where it’s supposed to be. When in doubt, try living without doing anything for a while. You may not be as lonely as you think.
One of my friends realized she was doing too much and decided to stop doing all her beauty maintenance all at once. “I went through a withdrawal period and felt very ugly for a few weeks, especially when I stopped getting eyelash extensions and nail polish. But then I reached a new normal and now I feel as good as ever. ” she says. (I did something similar a few years ago. Maybe I’m delusional, but the truth is that I use fewer products now and try not to push myself as hard.) I think it looks better because of it.)
Feeling unburdened is a reward in itself. When Thakor and Baska were reevaluating their lifestyles, they both sold many of their acquisitions, including luxury handbags, shoes, and jewelry. “I told myself that if I really regret letting it go, I can always buy it again,” Baska says. “But I never was.”
This may come as no surprise, but a 2018 study found that social media consumption was directly correlated with an increase in impulse purchases. Pay attention to who they follow and what makes them want to buy. Mr. Baska says he carried out a major purge when he began fiscal reforms. “I scrolled through all the accounts I followed and muted or unfollowed them if they weren’t close friends or people who made me feel good,” she says.
Thakor says that while looking at her feed, she felt the urge to shop and decided to create boundaries. All she has to do on a Friday afternoon is look at Instagram for two hours. You are also prohibited from buying anything you see until you have waited at least a week.
But remember, you’re not just comparing yourself to the people you see online. Colleagues also influence your desires. When Thakor first moved to rural Maine a few years ago, she was happy as a shellfish in her bare-bones cabin. A year later, she noticed that her neighbors had paddle boards and fancy water pumps, and she wanted one too. “We’re all socialized to want to see what other people in our circles have,” she says. “Please note that this is a normal phenomenon. But there is no need to give in.”
Your desires change, and that’s okay! “Maybe you get hooked on a show for a few seasons and subscribe to HBO, but then the show ends and you realize you’re no longer on it,” Thakor says. “It’s normal to change your priorities and realize that something you once loved no longer serves you. Just get rid of it.”
The main factor that causes changes in lifestyle is that the rush to “level up” or buy new things quickly wears off. This is known as a hedonic treadmill. The idea is that most people have a “set point” of happiness and return to it no matter what good or bad things happen. According to this theory, money and accomplishments won’t make you any happier than you already feel, or at least not beyond a temporary depression. The good news is that giving up certain things doesn’t necessarily make you less happy. Sure, the loss may feel a little sad and stifling at first, but you’ll soon get over it. Or maybe you actually feel better than usual, knowing that long-term self-sufficiency trumps temporary impulses. There’s only one way to know.
Email your money worries to mytwocents@nymag.com (read our posting terms here).
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