The Personal Spending Rules That Save Me Thousands Every Year

How we spend dictates how much we can save and invest. It all starts with putting a few rules in place. Here are mine.

Big Purchases Are Never Made on Impulse

I never buy anything over $1,000 without deep research. Whether it’s a car, a vacation, a major household appliance or a new investment product. If it’s four figures or more there’s going to be a lot of research carried out and comparisons made before I hit the buy button.

Anything over $100 has a different rule. I wait 24 hours before buying. This avoids impulse spending on smaller but still significant purchases. This mindset becomes second nature over time. One day you’ll notice you’re using it for much smaller purchases too.

Big Expenses Are Kept to a Minimum

The common advice to stop buying coffee shop lattes when you need to save money is problematic for a simple reason. Coffee doesn’t cost that much, not compared to major expenses like housing or childcare. If you can find ways to rearrange your life to halve your housing or childcare costs, you’ll save significantly more than if you halve your coffee costs.

Throughout my life I’ve kept housing costs to less than 20% of my income, often much less. Strategies for this have varied. I’ve lived with family, roommates, and strangers. I’ve worked in return for housing while living abroad. I’ve lived in non-conventional housing. I’ve lived in Spain (where housing costs at the time were a fraction of those in my home country).

Are all these strategies practical for most people? Not really. But it’s worth thinking about what might work for you, even if it’s something drastic like relocation. If you start with your biggest expense, which for most of us is housing, and intentionally look at ways to reduce it to the lowest possible figure, it can make a huge difference over time.

I Don’t Buy Things I Don’t Need

This seems obvious, but most of us aren’t even close to following this rule. Look at your last ten purchases. How many were true needs? When it comes to basic things like clothes I don’t buy anything until I’ve checked my closet to see if I own something very similar. I almost always do.

My biggest tip here is to do a big declutter and actually organise your possessions. It may seem counter intuitive, but when you have less, you’re more aware of what you actually own. You don’t end up buying another version of something that you actually already have stuck in a closet, kitchen cupboard, or junk draw.

I Think of Spending in Terms of Life Energy

This is a concept covered in the book Your Money or Your Life by Joseph R. Dominguez and Vicki Robin. The authors urge readers to see money itself as life energy, given that most of us exchange precious reserves of energy – and hours of time – for the dollars in our paychecks.

How much time and energy does it take for you to earn $500? Thinking like this puts big purchases in a whole new light. Is that new item really worth 10 hours of your time and energy? Or 20, or 100?

This actually works both ways. Some things ‘cost’ several hours and only bring you one hour of low-level enjoyment. They’re probably not worth it. Some things only ‘cost’ an hour of your life but will bring you a lot of joy, sometimes for years to come. They’re the true high-value purchases.

I Design My Environment

My environment isn’t set up for spending. I don’t save payment details for next time when I check out online. I unsubscribe from marketing emails. I don’t scroll endlessly on social sites that are always trying to sell you something, directly or indirectly. I enjoy most of my leisure time in non-retail environments (up a mountain or on a secluded beach when I can).

Your environment has a big impact on your behaviour. Make sure it’s not screaming at you to indulge in unnecessary spending.

I Focus on Creating Much More Than Consuming

I’m a professional writer, a (very) amateur photographer, and a creative in general. I’d make something than buy something. My daily activities are much more focused on creating than consuming.

We’ve become a society where consumption is — for many of us — built into our daily lives in multiple ways. Creating isn’t. We have to seek it out. But when we do, we tend to save money and feel more fulfilled. Creative hobbies are worth cultivating.

These rules help me because they’re specific and strategic. If you’ve set yourself a vague rule like ‘spend less money’ it’s hard to implement because there’s no actual strategy there. Consider these instead.

About the Author

Karen Banes is a freelance writer specializing in entrepreneurship, parenting and lifestyle. She writes articles, website content, ebooks and the occasional award winning short story. Her work has appeared in a range of publications both online and off, including The Washington Post, Life Info Magazine, Transitions Abroad, Brave New Traveler, Natural Parenting Group, and Copia Magazine. Learn More About Karen