Moderation is a tool that is helpful in all aspects of life. But how do we achieve financial moderation for ourselves and our families?
- A good spending ratio is 50% on needs, 30% on wants, and 20% on savings.
I was not the typical newly married woman – I was single for a few years and had a decent job. I did not want to burden my parents with my expenses so I lived very frugally. I knew that real expenses were coming up – tuition, mortgage… so wherever I could cut corners, I did. If I had leftovers, I repurposed it (whenever my husband sees me busy in the kitchen, he asks what ingredient I am trying to get rid of). I rarely cooked meat – chicken is healthier anyhow and cutlets were a treat. We did not vacation. We bought a two-family house so that the income would cover the mortgage. We did not buy gifts for each other. I have to be honest – it was difficult for me. If I did it again, I hope I would be smarter and realize, little expenses once in a while take some pressure off of you, as long as it doesn’t become the norm. I liked good quality clothes but swallowed my pride and learned to shop at Target. The feeling of not having to answer to anyone is liberating as long as you have the motto in your head that you are making smart decisions. I learned that my value is not my comforts or externals but rather having a goal and keeping to it. This may sound extreme for some and normal for others – always set the bar a little higher than where you are at. I saved more than 20% and spent less than 30% on wants but I have many more years worth of savings. I have become a much less needy person now. Just because everyone has the latest xyz doesn’t mean I need it.
- Are you looking at short term satisfaction vs the long term goal?
A sign of maturity is putting aside an instant reward for something more worthwhile in the long run. Practical example: Young children need a cookie as a reward for behaving, older ones can wait for a weekly treat. We must behave like the adults we are – do you find you are making amazon orders all the time? Try this – put whatever you want in your cart and wait a week – do you still want it?
- Do you worry that your children will not be socially accepted if they don’t dress well or don’t have the latest toys?
They should definitely be within the normal range but they don’t have to have the best. This is the biggest gift you can give your kids, the gift of being satisfied with less. My teenage daughter needs to approve of what I wear when going to PTA but I hope one day she won’t judge someone only by their cover. When my teens ask me for the latest sneakers I don’t buy it right away and hey, sometimes it gets sold out and they see that they lived through it.
- If you spend a lot on prepared foods, see how much you can save if you made the same or better meals yourself!
Learn to cut back a little in this area – if you eat out once a week, make it a less expensive spot and save the higher end restaurants for special occasions.
- I don’t know what the correct approach to children and finances is–do we want our children to earn money or do we prefer they don’t get caught up with finances until they need to?
If they do earn money they should definitely give tzedaka, be allowed to spend some of it, and save some.
- If you are worried that you will become too frugal–cut back on your own needs but be generous and kind towards others.
Most importantly – never judge another person’s spending habits – what is a necessity for one can be a luxury for another. (I always had almost full time help because I worked and couldn’t juggle everything but I saved in almost every other respect.)
- Keep this motto in mind – ‘Don’t be penny wise and pound foolish.’
When I decide to make a big purchase, I sometimes overspend because I am in the spending mindset but 10% off a few hundred dollar garment is a lot more than 10% off the cups I drive to the other end of town to buy.
There are worthwhile investments which I probably sometimes pass up because of my mentality. If you don’t trust your own judgment, ask someone that isn’t tied to the situation and can guide you.
I cannot guarantee any of my tips will make you rich financially but it will give you peace of mind knowing you are living within your means. Each and every reader can help themselves and their friends by taking small steps. Let’s learn to respect people who spend within their means rather than thinking they are ‘nebby’.
I definitely do not set the latest fashion trends but I would be so happy if I can make being financially prudent the latest style.