Here is a quick money hack. If you compulsively feel like buying stuff when go window shopping, then this might work for you. Whenever you want to buy something, make it a habit of thinking in terms of the number of hours you will have to work in order to earn money equal to the cost price of the thing you want to buy. For example, assume that you earn $5 per hour (minimum wage in some states, on the lower end). Now, suppose you want to buy yourself a $5 smoothie just to satisfy your sugar craving. Instead of thinking about the cost of the smoothie in terms of the dollar amount, tell yourself that it requires one full hour of work to buy that smoothie. That will surely make some of you think twice.
To further illustrate the point, and to get some interesting numbers, I ran this ‘hours-of-work‘ thinking through some hypothetical people earning different salaries per hour - minimum wage workers ($6.25/hour), graduate assistants ($15/hour), high school teachers ($25 per hour), and doctors ($70/hour). For these folks, a few typical expenses (with approximate costs) are considered and the cost in terms of ‘number of hours work’ is calculated. Here are the numbers:
Note that the numbers are rough measures - just to give you an idea. You could probably refine them to include interest costs (if you borrow for expenses like car, house, etc.).
It’s amusing to imagine what will happen if your new car dealer tells you that you have to work at the dealership for 3360 hours (about 1 year and 7 months, with full time employment) if you want to buy that new car….that surely sounds a bit *too much* than say, $400 per month.
This line of thought will work more effectively for large ticket items, although it will generally work for any expense.
By the way, the next time when you are in an introspective mood, get your calculator (or excel sheet) and think about how many work hours you have traded to buy stuff that you really didn’t need. You might have a learning moment at the end of the exercise.
Have you used any similar mind games to reduce spending? Does thinking about costs in terms of anything else (other than hours of work) makes you think twice before pulling out your credit card?