MANILA -- Back in January, a friend confided in me that this year, she would really start saving and begin putting away money for her future. She will be the first to admit that she is a compulsive shopper and Cathy (name withheld upon request) asked for advice on how to overcome her poor money habits.
Sadly, this is not the first time she and I had this conversation, and over the years, I’ve tried to give her tips and advice hoping they will work, even just one of them. When April kicked in, I decided to check up on her, and I was surprised that for the first time in over a decade, she has made some real progress in her saving journey.
Much as I would like to claim credit for this, Cathy confessed that the one thing that helped her the most was she stopped spending. While all the tips I doled out were nice to know, and they were all around cutting back on spending, until she accepted that she has a spending problem, there was no way she could have changed her situation.
So I asked her to share what were the triggers for her spending and if these red flags are in your financial lives too, better watch out.
FOMO or the Fear of Missing Out. Now included in the Oxford dictionary, FOMO means anxiety that an exciting or interesting event may be happening elsewhere, often aroused by posts seen on a social media website, and one worries he or she is left out. "Attacks" of FOMO are usually blamed on social media channels such as Facebook, Instagram, and Twitter. Cathy who was hooked on Facebook, would see friends watching a concert or play and want to go too. Or catch a new cookware featured in Instagram on 50 percent off and click to buy.
FOMO triggers a fear of regret, that one might miss an opportunity for social interaction, a novel experience, a profitable investment, or other satisfying events, and this has become a profitable marketing tool for many companies.
When Cathy turned off notifications on her social media accounts for a week, she discovered she had less reasons to take out her wallet and swipe her credit cards so she turned one week into two and stretched it to a month. “I haven’t signed off on these accounts yet, but now that I know the problem and cutting back on my exposure, I have taken control and I plan to keep it.”
No to Dining Out, Yes to Cooking. Cathy likes to eat but does not know how to cook, so she tends to dine out for a meal at least once a day. On weekends, that could be for all 3 meals and maybe even a coffee date or a cake date. When she used a budget app to track her spending, she was surprised to see a big chunk going towards food expenses, so she started going to the grocery twice a week to stock up her ref. She would buy pre-seasoned meats that she just needs to grill or fry. She also looked for one day cooking classes to learn simple recipes or would beg friends for demonstrations in their kitchen. In just two months, she saw a huge drop in her food-related spending.
"It was ridiculous to be spending P500 on lunch each day, easily twice that for dinner with drinks and then get upset why I can never save any money. I still eat out with family and friends, but a lot less compared to last year. I like to look at the app and enjoy seeing the money I saved to keep me motivated.”
One more advantage: Cathy pointed out that she eats healthier when she gets to choose what ingredients go in her meal and how she cooks it. She is just as thrilled with losing weight and getting rid of the 5 or so pounds she gained in her early 30s.
Giving Up City Living to become a Homeowner. Renting a condo in the heart of a business district has its advantages. Cathy could walk to work, meet her friends for dinner and drinks most nights, check out museums on weekends, and pop into shopping centers that are close by. For nearly a decade, she did not feel the need to buy a car, as most of her friends did. And yet, they seemed to have healthier savings accounts despite paying for a car.
She realized that between the cost of her condo rental and the association dues, she was paying at least double for her address than her friends do for their theirs. And being in the middle of it all meant so many spending temptations were within her reach.
She looked for alternatives and decided to give up her condo for a chance to own a modest home about 12 kilometers away. She will have more living space, even a small garden and finally something she can call her own.
“Buying my first asset felt great. It was scary to commit to years of mortgage payments but it’s time for me to grow up financially. I made sure that I can commute to work, because I am not ready to also buy a car, and that I have family and friends nearby. What’s funny is that I only looked for a nearby supermarket before deciding to move. The farther away I am from a shopping mall, the better.”
Paying Off All (Bad) Debt for Now. Thanks to her budget App, Cathy also saw that she was paying off so many Wants purchases: earrings with the office alahera, her smart phone with her telecom company, travel expenses from a year ago and a designer bag with her credit card, the list was just too long.
That was a lot of debt that Cathy had been taking on assuming she is still young and can pay it off in time from her monthly salary.
"That’s why I hardly felt my pay – I would get my salary, pay all these off, and then have to wait again for the next pay date. Just because the payments are small and over a flexible period does not necessarily mean I should buy it or can afford it so I am not adding to this list and cannot wait to pay them all off."
Sale Shopping is Out, Diving into Own Closet is In. Cathy knows all the sale seasons of her favorite brands and would get invitations to preview sales so she can get her hands on sale merchandise before the public. That was such a thrill for her and she would even take a day off work to go.
This is the hardest sacrifice she’s made so far, she confessed, but also the one with the most impact on her saving goal.
"I already missed the post New Year sale, and the winter season sale. I have to brace for the summer and spring sale and started to hit the unsubscribe button to many emails."
When she wants to update her wardrobe, she dives into her own closet for items she has not worn for months of years. She also reached out to friends for closet trade nights – as they have similar dress sizes, they can swap clothes they no longer want and go home with items from friends’ closets.
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Yes, it’s only been three months, but most habits stick when you embrace them for 30 days or more so the future looks bright for Cathy.
"From FOMO, I embraced JOMO or the joy of missing out. Nothing wrong with staying home for a quiet dinner, catching up with friends over the phone or on Facetime instead of in an expensive restaurant. I am now setting money goals, not just lifestyle goals. And I always remind myself: the math is simple: you can’t save if you keep spending!"
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