After a quick search, I came across the automatic savings plan. The gist of it is that at the beginning of each month, you automatically move money into your savings account and then live off what’s left in your checking, guilt-free. It’s the pay yourself first approach.
Guilt-free? I figured I could get on board with that.
And it worked, for a while. But there were still two problems:
- Though my spending was supposed to be “guilt free”, it did kind of feel like I was wasting my money, and
- I still got money anxiety at the end of each month because I’d usually run out.
In fact, I remember an embarrassing moment one evening in San Francisco. I was in near tears in front of an ATM because I didn’t have enough cash to buy a burrito. If you’ve ever had a craving for a burrito in the Mission only to find out you can’t have it, you’d probably cry too.
Automating my saving and spending wasn’t the cure-all I was hoping for.
Problem: Mindless spending.
Post-burrito tantrum things got back on track for a few months. Sure, I’d run out of money at the end of most months, but I knew to expect it.
After Jordan and I got married and combined most of our money, we stuck with the automatic savings plan because it was easy. But it definitely wasn’t perfect.
One night when he was looking through our credit card bill, he commented that most of the charges we made were those mindless $20 and under purchases that happen too frequently. You know, the swipe that doesn’t feel bad because it’s only $17.45.
Those swipes were fine though because we paid off the balance every month and we were still saving the suggested 20%. That was the textbook definition of fine. But was it really fine?
Don’t get me wrong: saving 20% is a big accomplishment. It took us deliberately adjusting our life so we could hit that target. We’ve always lived in VERY expensive places: San Francisco, Los Angeles, Honolulu, and London. Hitting that 20% meant we were on track to someday buy a home and safely retire at 65.
To be honest, though, we had other ideas of what we wanted to do aside from retiring at 65.
I wanted to pay off my student loans and change careers. Jordan wanted to build a house.
But we realized that all those under $20 purchases meant we had the problem of mindless spending. For a brief, fleeting moment we thought about trying to meticulously track our budget again.
Nope. Not going to happen.
We worked really hard for our money and we didn’t want to feel guilty spending it.
We also worked really hard for our money and didn’t want to give it up so easily.
What we really needed was to strike that balance but were both a little stuck on where to go next.
Solution 2: The happiness plan.
One day, it occurred to me: what if instead of trying to restrict ourselves from only eating out occasionally or only buying things once in awhile, we focused on only spending money on the things that would truly add to our happiness?
Spend on things we get the most happiness and value from, don’t spend on things that don’t.
This felt like a simple, almost too obvious shift. Weren’t we supposed to do something more dramatic?
But despite the simplicity, we decided to give it a go.
We didn’t carry a list around, make strict rules or anything crazy like that. We’d just take a little pause before purchasing something and ask, “Will this make me happier? How much happier? And why?”
This soon became the perfect balance.There were a lot of things we spent on or wanted to spend on, that made us much happier. Like a cleaning lady and weekend trips exploring the rest of Europe.
And there are a lot of things that didn’t really make us happier. Like picking up disappointing takeout all the time. An Amazon Prime membership that had us watching too much TV. Walking out of the drugstore with two new beauty products to try and another bottle of nail polish in an ever so slightly different shade of pink. Or grabbing a latte and pastries nearly every time we went on a walk to Hyde Park, just because it had become a habit.
We were surprised at how many moments we would reach for our wallet to buy something, only to realize that we really didn’t want it. Or how many nights we went out to dinner because we were bored and not creative enough to come up with a different activity.
The simple shift of stopping to ask, “will this make me happy?” started getting us bigger results. We didn’t run out of money at the end of the month. We didn’t get a tinge of guilt when we spent money. And we were surprisingly calmer about money mistakes (like when I accidentally called the US from my UK phone and racked up a horrible bill. Whoops).
But most importantly, we felt more in control. We started to see how we could make a plan for the things we wanted to do in life.
