So you’ve made it! You are a practicing professional and are in the career that you’ve worked so hard for. You feel like you deserve to reap the benefits of all of those years of hard work and sacrifice. Whether you are a practicing physician, nurse, lawyer, or any busy professional this is how most people feel after completing their schooling/training.
The benefits that professionals seek are usually in the form of spending on high ticket items. This can come in the form of a nice house, expensive meals, cars, vacations, increased shopping, etc. The worse part is that society, family, and even friends may expect this from us. We then play into the role of keeping up with this facade to eventually realize that we still have tons of debt, no real investments, and instead of working out of passion, we are working for a month-to-month paycheck. The question now: is it worth it? Do all of these items actually make you happier or bring significant meaning to your life?
Maybe some do, but most things don’t. Spending more money does not correlate linearly to increased happiness. Especially when we keep focusing on the things we “want” instead of the things we actually “need.”
“The best things in life are free. The second best are very expensive.”-Coco Chanel
This leads to professionals who are bad with money due to frivolous spending habits and spending too much money on things that don’t matter. With a further understanding of money, perhaps they could learn to prioritize spending on things that are actually adding value in their lives.
I started to reflect about my own spending habits after reading B.C. Krygowski’s most recent book Spending Habits For Professionals Who Want to FIRE. This post goes over how to create better money and spending habits that I have found useful in my own life.
Why are Spending Habits Important?
Habits often time can seem so benign since they don’t seem to have any longterm consequences. However, developing proper spending habits can mean the difference between becoming financially independent in your 40’s and working on your own terms versus working your entire life just to barely keep up with your bills. Here are the 4 ways I’ve found how not to spend money (as much).
4 Ways to Create Better Spending Habits
1. Spending Habits on Homes and Cars.
The very first thing you can do is to refrain from buying things outside your means. The two biggest ticket items are going to be purchasing a home and cars. This sounds so simple, but when a real estate agent or car salesman is pulling on your emotions to just get that dream house, apartment, or car, it is easy to cave in. Especially with a spouse or kids that are tugging at your heartstrings.
Always go into a situation with a clear amount of money you are able to spend and don’t budge. “What’s another $5,000 or $10,000?” some people may tell you. You are a high earning professional after all right? WRONG… don’t budge, walk away and your future YOU will thank you for it. Furthermore, you are not just saving that $5,000-10,000. You are saving hundreds of thousands of dollars by developing the skills of how to be smart with money and breaking bad spending habits. Spending on big-ticket items is an easy way to keep working paycheck to paycheck.
2. Spending Habits on Food
The single largest item that affects our monthly expenses is food. It is often difficult for families of busy professionals to consistently cook meals each evening. Many times we order takeout and feel too tired to actually cook. When my wife and I do decide to cook meals it seems like the cost to make a meal at home costs even more than ordering takeout! The hardest part for my family is to find ways to spend less money on food, cook more frequently, and make healthier meals. This is the area I probably struggle the most with my spending.
From B.C. Krygowski’s new book on Spending Habits, I learned a ton on how to save money and still get good food. Here are a few items she goes over in her book
- Grocery Shopping: Find the best stores with the best prices (I didn’t know there was such big difference in prices on the same items among stores such as Aldi, Target, Costco, Sam’s Club). The overall recommendation is Aldi’s and Sam’s club. Which my wife and I are to starting to look into.
- Instant Pot: Okay so this is something my wife and I use all of the time. We actually have two Instant Pots. I’m not a great cook but all I know is that it cooks things fast and the quality comes out great. For a busy professional that’s all you need. Recipes that would take us 3-4 hours would take less than 30 minutes to make in the instant pot. You probably already have one, but if you don’t, GET IT. Here is a link. Also here is a link to a Facebook group for Instant “Potheads” if you are interested in any quick recipes.
- Potlucks: Sometimes you may want to hang out with friends at your house, but dread the cost of $200-400+ just to host a dinner party. B.C. Krygowski suggests hosting potlucks to help defray the cost. My wife and I hosted 2 potlucks recently and it worked out great. Everyone got to enjoy each other’s food and many times guests feel more comfortable when they can bring something to the hosts’ home. We will definitely be hosting more potlucks in the future. We even had an Instant Pot potluck party! Be careful it can use up all of the electricity in your house.
3. Spending Habit on Shopping
Another black hole for our monthly expenses is shopping, especially online shopping. B.C. Krygowski suggests limiting the amount you do on online shopping by setting a hard limit on your online spending and deleting shopping apps on your phone. Another thing she suggests, that my wife and I do consistently use is Rakuten.com (previously known as ebates) to get money back on almost all of your purchases. We’ve received over $500 cash using Rakuten.com and you will be surprised that almost all major online stores participate and you can usually get between 1-5% cashback on your purchases. A check just gets sent to you in the mail each month.
4. Spending Habits on Travel/Amusement
Personally, my family and I have not done too much traveling since we had our second child. We usually have 1 trip a year in the summer such as a short cruise or a 5 day trip out of state. No international travel as a family yet. By limiting the number of high-cost trips and staying local we have been able to save a lot of money.
There actually a lot of free things we found we could do in our local area. Something I didn’t realize until this past year is that Bank of America offers free museum access for the first full weekend of every month if you have an account with them. They offer free museum access in almost all of the states. We’ve saved lots of money using this and try to plan our first weekend at one of these free venues.
However, my children are getting a little older around 4-8 years old and now we are planning on traveling a bit more. However, when I look at the budget for each trip it costs usually around $3,000-$5,000 to go out of state. Especially since we have to pay for a plane seat for each child now.
If you are in the same boat as me you definitely need to check out Dr. McFrugal’s page on travel hacks. I was really skeptical about credit card hacking but he has made me a believer. This year we are getting our companion pass from Southwest, which basically lets both of my kids fly free! In addition, I’m learning how to use reward points to book free hotel stays at the Hilton while getting perks like free meals, free room upgrades, and late checkout. Please check out his site, it’s amazing.
How to Change Spending Habits
If you want to learn even more about how to optimize and change your spending habits to achieve financial independence, you need to check out BC Krygowski’s new book: Spending Habits for Professionals Who Want To FIRE. It is an excellent short read and costs under 10 bucks on Amazon. It is packed full of useful information that can save you thousands of dollars if not more with some simple Spending Habits. I highly recommend it! You can also check out her blog: HERE.
Half of the book talks about food since that is probably the one area that we splurge on continuously without giving too much though. I listed the book chapters below so you can preview for yourself the content and how it can relate to your own life. Good luck with learning how not to spend money on the things that don’t matter and focusing on the things that matter most!
Main Chapters in B.C. Krygowski’s Book: Spending Habits for Professionals Who Want To FIRE
- Grocery Shopping
- Saving Time and Money by Using an Instant Pot
- Eating Out
- Food Delivery
- Meal Planning
- Decrease Food Waste with Proper Food Storage
- Lower Your Food Costs With a Whole Food, Plant-Based Diet
- Personal Chefs
- Household Costs
- Online Shopping
- Home Exchange
- Travel Savings
- Staycations and Camping
- Weight Loss on the Cheap
- Cutting Your Beauty Bill
- Saving with a Babysitter
- How to Save Time and Money with an Efficiently Run Household
- Saving on Kids
Love this! I even learned stuff from YOU reading this post. Thanks so much!
Thanks BC. I appreciate you and the book. What an amazing resource for people.
Miss your posts man! Any tips on being Zen during Covid?
Thanks Dr. Ko! Yes I do need to do a post on this. Hope you are safe and doing well.