Theres nothing like a global economic crisis to provide incentive to reassess your spending habits and redefine the word necessity. Dinner, thats a necessity. Dinner at Masa (home of the $50 martini) not so much. Clothing necessity. The latest pair of Manolo Blahniks definitely not.
Okay, so those examples are a little over the top, but bring it down a notch or two, and differentiating between necessity and splurge gets personal. According to a recent study published in the Journal of Consumer Research, subjects with low self-control had a much longer list of essentials than did their more restrained counterparts. (What do you mean my daily lattes are dispensable?)
The reason so many of us have a hard time curbing our spending habits, according to the research, is that to accomplish our goalin this case, saving moneywe have to go against our natural tendencies. "People are resistant to things that are uncomfortable or have them feeling deprived," says study author, Kelly J. Haws, an assistant professor of marketing at Mays Business School, Texas A&M University.
But as we usher out the glory days of conspicuous consumption, and come to grips with a bleak economic forecast, perhaps well begin to feel uncomfortable with lavish purchases rather than restrained spending.
In the meantime, whether youre living paycheck to paycheck or you are debt free and swimming in savings, be aware of your spending. And if you decide its time to rein in your spending, then follow these five steps:1. Whats your motivation: Why do you want to limit your spending? Write down your reasons, be as specific as possible. Perhaps you want to replenish your dwindling retirement account, or establish an emergency fund. Maybe you want to help out your elderly parents or pay off the second mortgage you took out to put your kids through college. Then again, maybe you just want to simplify your life, and getting more stuff doesnt fit that plan.2. Start small: Determine how you spend your money, and start saving by cutting back in areas of least resistance. 3. Reframe the issue: Rather than feeling deprived because you didnt buy that great cashmere sweater (and on sale, too), feel virtuous because you have moved one step closer to your ultimate goal (see number 1). 4. Recognize the urge to splurge. When you want to indulge on a big-ticket item, wait it out. Give yourself a 30-day waiting period. Tell yourself that if you still feel its a must have item in a month, youll buy it then.5. Reward yourself: No, dont blow the budget, but find simple ways to celebrate the positive steps youve taken.
