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Monday, May 1, 2017

Saving Should Not Feel Like a Diet

Posted by Tim Stobbs on July 7, 2010

I’ve noticed that some people like to compare the two concepts of losing weight to saving money.  In some sense it is a good comparison as it does take some effort to change your habits and there is that satisfaction when you finally reach your goal.  Where the comparison often goes wrong is when people compare using a diet to savings.

A diet is often involves looking at what you are not eating.  You don’t eat junk food, you don’t have dessert, and you don’t buy that square for snack.  There becomes a almost excessive focus on what you are not eating.  So often people then start to feel deprived and by the time their are done their diet they load up on all those missing things only to put back on the very weight they lost.  This causes another round of dieting and the cycle continues.

The very same cycle often occurs for people around debt and savings.  We often create these overly restrictive budgets with little to now room for extras so your life becomes one large exercise in what you are not buying.  We focus on not buying that coffee each day or not buying that new shirt or DVD.  Yet the reality is to be a good long term saver you need to focus on what you are working towards, not about what you are missing.

Life doesn’t mean you have to never have any fun or never eat anything that tastes great.  It’s about being moderate in those choices that do cost a lot of money or calories.  I still buy things I really don’t need, but I do want them.  I know that I don’t need them, but I occasionally will buy a new DVD that I really enjoy watching or I go out for supper and only eat appetizers and dessert.  Strictly speaking neither is particularly required, but I do enjoy doing it once in a while.  It only becomes a problem if you are doing it every week or daily.

So I choose to enjoy those things I do buy and sleep well at night knowing I’m still working towards my long term goals.  Life is often a balance of things.  It’s just a lot of work to find your own sweet spot where you are happy with both your long term savings and your short term spending.  Yet getting there can be worth it because you never feel like your on a diet.

So do you diet or do very restrictive budgets?  Does it work for you?  If so, how?  If not, what was your downfall?

Comments

7 Responses to “Saving Should Not Feel Like a Diet”
  1. I can be restrictive on both diet AND budgets and it doesn’t bother me – I don’t freak out and binge after. Sometimes I wonder if there isn’t a different mindset that can be adopted by some people. Most people who fast for spiritual or detox purposes don’t act crazy afterwards and pig out where some people who do it to lose weight (think Beyonce on the Master Cleanse) do go nuts. On most days, I do some kind of intermittent fasting and don’t go hog-wild afterwards, but have a friend that’s tried to do it too and they do go nuts. The only difference I can see is that I don’t tell myself a bunch of stories about how horrible it is to be hungry for an hour or two. Besides, it comes and goes if you wait it out.

    The same thing goes with money and budgets it seems. I was restrictive this last month, but I didn’t run out and spend like crazy come July 1st. That’s why I get confused when people tell me that if I temporarily restrict myself I’ll feel deprived and want to go crazy spending afterwards – because I personally don’t. That may be true for them, but it’s not true for everyone.

    For me it works if I have some goal. Like right now, I’m restricting myself with groceries for a purpose (to clean out my pantry), and overall spending is moderately restricted until my stock account recovers to the pre-fall levels (lost ~5%). But that doesn’t mean that I’m canceling my August vacation, I’ll just spend less than otherwise and be more mindful of the value I receive for that spending.

  2. JMK says:

    I don’t plan for any nonessential expenses in my budget, but I find for me that works better than if I planned on an amount for entertainment, DVDs etc.

    I tried having a set amount each week or month for clothing, entertainment, and general stuff (DVDs, books, coffee etc) but I found that once I’d put an amount down, I tended to spend it because in my mind I’d already justified the expense. Now I only plan for the bare essentials (mortgage, utilities, groceries, gas, property taxes and insurance). This generally amounts to 55% of our take home pay. This way if we do pick up a DVD, get a haircut or go to a restaurant it clearly sticks out on the spreadsheet because I have to manually add an extra unplanned item. It makes me far more aware that it was a choice to make this unplanned purchase. I find it also makes me think more before I spend, and when I do spend I appreciate it more because I really thought about it instead of just using up my preset entertainment budget.

    After my spreadsheet of planned expenses has been updated with the actual costs for the week, and the pay has been received (we’re on alternating weeks so it’s always a pay week), then I assess how much extra I can skim off to go to the retirement accounts or an extra mortgage payment. If we did any unplanned spending, the amount skimmed off will just be smaller – yet another reminder of the impact of that choice to spend.

  3. Hazy says:

    I don’t do much in the way of budgeting.
    But my goal isn’t to spend as money as I can get away with.
    I have a lifestyle that I’m comfortable with and as long as my income meets the requirements I don’t worry about it.
    As my income went up over the years,there was more excess money that got squirreled away.
    When I got to FI,it actually took me by surprise because I wasn’t paying much attention.

  4. George says:

    Saving isn’t dieting. For me, saving is creating more income for my early retirement.

    So the question becomes: “how much more income can I generate?” which is a different mindset from “how much can I save?”

  5. deegee says:

    @George……good point, and I surely agree.

    As I was putting together the pieces for me to retire in 2008 at age 45, one big piece was finding a bond fund which could generate most of the income needed to cover my anticipated ER expenses. I found one within my risk comfort level and followed it for a few years before I left my company and placed the proceeds from the company stock I sold into that fund. For the last 20 months, it has been providing more than enough income to cover my expenses.

  6. Canadian Dream says:

    @ George,

    Actually that is a good point. Early retirement saving is a little different than just flat out regular saving since you are trying to typically build an income generation portfolio. Yet I think the theme of the post remains the same: you should not focus on what your not buying…it becomes self defeating.

    Tim

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