We’ve all done it: that candy bar at the grocery store checkout, that midnight Amazon purchase, that pair of aspirational wrist guards because this summer you’re definitely going to use those Rollerblades.
Americans have a spending problem. Research in 2019 showed that the average American spends almost $18,000 a year on nonessentials. And nearly 1 in 5 says they’re spending more now than they were before the pandemic.
Unnecessary spending looks different for everyone, but regardless of your financial situation, we could all stand to stretch our dollars a little further. Tiffany Aliche, better known as the Budgetnista, is a personal finance expert and educator — and she gets it.
“We impulse-shop because it feels good in the moment, right? It’s like the Band-Aid,” she says. “It’s the cool glass of water on a really hot summer’s day.”
It’s OK to do a little comfort shopping, especially in these tough times — “but what I’ve learned is to impulse-shop within parameters,” Aliche says. Don’t let short-term wants get in the way of your long-term savings goals.
Here are a few ways to start curbing that stress-spending and start saving a little smarter — today.
Make a budget. Don’t just ballpark it in your head — write it down.
“Get a clear visual picture of what your money is doing now. The rule is, if it’s not written down, then it’s not a budget,” Aliche says.
Once you’ve factored in necessities like food, shelter, water — and savings — then factor in fun. Whether your fun budget is $5 a week or $50 a week, it’s important to set that money aside. “Money is not just meant to be responsible with — you’re supposed to enjoy money, to use it as a tool to make your life better,” says Aliche.
She speaks from personal experience. After over a decade as an early-childhood educator, Aliche lost her job and her home in the 2008 recession and had to move back in with her parents. After rebuilding her financial life from scratch, she decided to share the wealth and became a financial educator.
“I don’t believe in over-sacrifice,” says Aliche. “I impulse-shop as well. But what I’ve learned is to impulse-shop within parameters. So I give myself a weekly, if not monthly, budget where I can buy things within that budget.”
Need it, love it, like it, want it.
Before you reach for those fun-budget funds, Aliche has a bit of advice. She says to ask yourself, ” ‘What are the things that really make me happy? What are the things that really bring me joy?’ ”
To keep those priorities straight, Aliche says she has a sticker on top of her computer that says, “need it, love it, like it, want it.” And before hitting that purchase button, she wants to make sure that what she’s buying is a love — that it will bring lasting joy.
“Likes are short-term joy. That means less than a year, I’ll have forgotten about this thing,” she says. “Wants are just instant gratification where not even a day later, I’m not going to be interested in this thing.”
Sound familiar? We have all purchased some wants — whether it’s a bright purple sequin T-shirt or an artsy tote bag from a concert or Rollerblades that are now gathering dust in the closet. These wants are particularly damaging, Aliche says, because “not only am I spending money that I don’t have, but I’m actually making my life less enjoyable because these things don’t give me lasting joy.”
Don’t worry if it doesn’t come easily at first, Aliche says. “It’s a muscle that you have to practice. Do I need it? Do I love it? Do I like it? Do I want it?”
Figure out your “noodle budget.”
What is the bare-minimum amount of money that you need to keep going? What are the things that you can drop if times are tough? Aliche calls this her “noodle budget” (noodle as in ramen noodles, which she eats when things get tight). “For some people, it’s peanut butter and jelly; for some people, it’s rice and beans,” she explains.
When you’re strapped for cash, you should be able to cancel your cable or Netflix subscription and switch to ramen noodles before tapping into your savings or (gasp) retirement savings. “Focus on your budget now and what you can do now, so you don’t take from your future,” she says.
And if spending is still an issue, Aliche has a suggestion: First, cut up your credit card. But if you’re the kind of person who has auto-saved credit card information into your favorite websites, you’ve got to go a step further. Call your credit card company, Aliche says, and tell it that you lost your card.
“They’re going to reissue you a card. And when it comes, you’re going to cut it or put it away,” she says. Aliche compares it to digging a ditch and says if you don’t want to keep digging deeper and deeper into debt, you have to put the shovel — your credit card — down.
Create and maintain a savings plan.
You should have between three and six months’ worth of emergency savings. Set it up in an account that has a good interest rate. Aliche says it’s also worth putting this cash in a bank that isn’t associated with your checking account, so it isn’t convenient or fast to transfer that hard-earned savings.
“Automation, automation, automation,” Aliche says. She recommends automatically withdrawing your savings and your bills into separate accounts each month.
Don’t cheat your future self — your Wanda!
Being responsible with money can be a drag. Instead of impulse-buying a plane ticket to Paris on a credit card, it means saving that money slowly over time. Aliche’s way of making this drudgery more fun is a woman named Wanda.
“I have named my future self. Her name’s Wanda. She is sassy and a little bit of a gossip,” says Aliche. “Wanda is 70 years old. And I think to myself, ‘It is literally my job now, as Tiffany, to take care of Wanda.’ And so if I say, ‘You know what? I would actually rather have cable now. … Wanda, you’ll be eating ramen’ — that’s not fair!”
Visualizing and naming your future self is a joyful way to think about saving for your future.
“It’s everyone’s job to take care of their older self,” Aliche says. “So what can you do now to make sure that your Wanda doesn’t have to work as hard?”
Finally, remember to give yourself a break.
It is, perhaps, an understatement to say that we live in tough times. Aliche says it’s important to give yourself a break if you make a financial mistake.
“It’s OK not to be perfect. It’s OK not to know the full way. So be easy on yourself — do the best that you can.”
The podcast portion of this episode was produced by Andee Tagle.
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