Here’s how I overcome the two main reasons saving money is hard for people:
- Inertia (aka mental laziness)
- Loss aversion to cuts in lifestyle
Overcoming inertia– which is just a fancy way of saying ‘changing your habits’– is often where my clients get the quickest spending wins. Changing your automatic habits is often more about spending a little time to, say, shop for a better deal on something, or change your banking structure to build wealth by default, vs having less stuff or less experiences.
How do you overcome spending inertia? You can start by figuring out your spending, and then do one of these things which don’t involve any sacrifice of your lifestyle.
Cancel stuff you don’t use anymore
Here’s a few examples to motivate your own saving:
- Cancel any subscriptions that you no longer use, or use so rarely you’d never miss them. Never use Hulu anymore because you spend all your time on Netflix? Cancel it. Write down all your subscriptions– look at your last months’ credit or debit card statement to find them all– and then make notes on the costs and which ones aren’t worth it anymore, then cancel them. Click this Google query and replace the word ‘Netflix’ with your subscription to find out how to cancel it.
- Bought a gym membership but never go? Cancel it, and optionally substitute with some body weight exercises, or buy some (used) home gym equipment.
- Bought something you don’t use anymore? Sell or donate it to free up space in your home.
Substitute with a free or cheaper option
Substitution is another great way to cut costs without cutting fun.
- Optimize your auto insurance to protect yourself for less.
- The library is a great way to get free books, ebooks, audio books, streaming movies (yes, you heard me!), and other freebies like digital subscriptions to paid services like newspapers or Consumer Reports. Sign up for a library card at your nearest branch and see what they have to offer.
- Cut your cable bill down to nothing with negotiation and dropping unnecessary services like modem rental.
- Get something used or free from neighborhood marketplace sites like Facebook’s Buy Nothing groups (find your local one), Nextdoor, Offerup, or, if you must, Craigslist.
- Switch cell phone plans to Consumer Cellular (I use and recommend them) or other small carriers like Ting. Google is getting into the act too. This takes a couple hours of time to port over your old number, but the savings will be several hundred a year for many people and most couples on a family plan. This is well worth your time and energy.
- Ask your friends and family if they subscribe to a service that they can add you to for free. I get Netflix, Hulu, Disney+, and Spotify all for free thanks to the generosity of my friends and family. Worst-case you can of course offer to split the cost with someone–saving you at least half the cost of the subscription– but many people have open ‘spots’ on these subscriptions to add people, and are happy to do so for close friends and family. (God bless them!)
- Do something yourself instead of paying for it. Yard work, simple car repair, dog-walking, cleaning, or even making your own hard apple cider are all skills that some people pay for but others do themselves. YouTube is your friend if you want to learn new skills. You might think you don’t have the time to do something, but remember that DIY’ing has other benefits too like exercise or using different mental or physical skills that have health benefits too. You also save the time it takes to shop or coordinate the service you pay for, and add to your own ‘personal capital’ whenever you enhance your skill set. Invest in yourself and save!
Loss aversion due to fear of lifestyle cuts
My clients are often resistant to even talking about spending cuts because they think it will mean a reduction in their lifestyle. While it’s true that we often overestimate the happiness we’ll feel when engaging in ‘retail therapy’, their concerns are legitimate. I try to get around this reluctance by recommending spending cuts that have small lifestyle cuts, or ones that are unknown, but can be easily tested and rolled back if clients find that they miss whatever they cut out. Remember that nearly every spending cut you make can be instantly and easily reversed, so there’s no risk in trying something out and seeing how it goes for a few weeks!
Reduce the frequency of repeat purchases, or delay an upcoming purchase
A great way to minimize the hit to your lifestyle is to just do a little bit less of something, and see if you really miss it.
- One of my clients cut her housecleaning service from once every 3 weeks to once every 4 weeks. I don’t think this made any difference in her happiness– or any noticeable difference in her apartment’s cleanliness– but it cut this bill by 25%!
- Delay your next haircut, massage, mani-pedi, or other personal care service.
- Delaying the purchase of your next car is a big way to save money. Changing cars every 10 years vs every 5 years will save you tens of thousands of dollars. Investing that difference over time will add up to hundreds of thousands. Driving my car into the ground is one of the best ways I’ve built my financial independence.
- Even just delaying routine purchases like a new cell phone or laptop will add up over time. This assumes your old devices work just fine for you. Don’t put up with glitches that are actually wasting your precious time or frustrating you!
Buy one thing at a time instead of subscribing
Ramit Sethi describes his a la carte method of just buying things when you want them as opposed to paying a recurring subscription fee. This method works great for things like streaming services (just buy one movie at a time), gym memberships (buy single use passes), or any other subscription service that you use infrequently.
This method works because we overestimate how often we use our subscriptions, and we
rarely never do the math to see if it would be cheaper to just buy one thing at a time vs subscribing. Gym memberships are notorious for this. I was occasionally going to a 24 Hour fitness a couple year ago, and then I actually looked at how often I went (this gym actually tracked that for me on their website, those fools!), which was only once every 2 weeks! I immediately cancelled my $40/month membership and switched to using $10 day passes instead, saving me $20 a month.
I do the same thing with streaming movies. If there’s one I wanna watch RIGHT NOW that I can’t get through the library– or through one of my friends’ or family’s subscriptions that I freeload on– then I just pony up the $3-4 and stream it, no sweat. I probably do this less than once a month, so I’m saving a lot vs paying $12-$15/month for another streaming service.
Simply jot down the cost of your subscription, divide by how often you use it to get the ‘per use’ cost, and then cut the ones that are more expensive than buying a la carte. Or, just cut them anyway and trust that buying a la carte will make you think twice about using that service and thus save you money anyway. You can always re-subscribe later if it doesn’t work out for you.
Make small changes at first
Some A few people get very gung ho about saving money and try to cut everything down to the bone all at once. “I’ll never go back to Whole Foods and will buy everything on sale or at Costco!” they say, and within a week they’re back to cashing their whole paycheck for organic tomatoes and trendy skin lotions. Instead, start small to avoid noticing any loss in your consumption. (That’s also why I recommend small annual increases to your retirement contributions.)
- Turn your thermostat down by 3 degrees in the winter, and up by 3 degrees in summer if you have AC. This will save you at least 10% on your heating bills, reduce your greenhouse gas emissions, and you’ll barely notice it. Just throw on a Merino wool sweater when it’s cold out– or move around a little more— and bank that extra cash.
- Pack your lunch for work one extra time per week than you already do.
- Make one more meal at home than you already do instead of ordering out.
- Host drinks or dinner at home for a change instead of going out, and encourage your friends to reciprocate.
- Say ‘no’ to one expensive travel plan (*cough* friend’s destination wedding) that you can’t really justify going to.
Where will your next $1,000 in savings come from?
Pick an area of your life that you can spend 1 – 2 hours on right now to realize some significant savings, and share what you do and about how much you’re going to save in the comments.