Saving money can be addicting and the sweet promise of not having to work can drive people to the extreme. So how do you save a large percentage of your pay without being miserable?
One of the most powerful ideas I learned from binging finance blogs is to reduce your spending consciously. Figure out what makes you happy, what you absolutely need to live, and then ruthlessly cut the rest.
But, if you are an over-thinker like me, trying to decide what to spend my money on sends me into a crippling philosophical crisis. What should I spend money on? Does this item spark joy? What is the meaning of life? Oh God, did I accidentally eat a magic brownie again?
5 Somethings
My solution was to outline 5 categories that I know are worth spending resources on. Each month I give myself permission to spend, within reason, money or time to satisfy one of those things. It’s basically a spending hall pass.
1. Something for myself
I buy one (reasonable!) thing I really really want.
Examples:
- New cozy PJs
- A New York Times Puzzles subscription
- A book that I really want to own instead of borrowing it from the library
2. Something that is stressing me out
Sometimes, money can fix problems. If something is really stressing me out or costing too much of my precious time, I fix it.
Examples:
- A tax accountant because my taxes are way too complicated to do myself (I tried and ended up with an incorrect $16k tax bill. Never again!)
- Replacing a dying house plant with a fake one I found at the flea market
- A second-hand robot vacuum to clean up while I’m at work
3. Something fun
Life is all about new experiences and having fun! Bonus points if you share your “something fun” experience with a friend, partner, or family!
Examples:
- 1 Euro museum entry on Sundays
- A pottery class, Spanish class, or cooking class
- At-home sushi kit
4. Something for my health
If you aren’t healthy, it’s much harder to be happy. Plus, being healthy can be super fun!
Examples:
- A second-hand tennis racket
- Train tickets to a nice mountain hike
- Taking the time to find a free outdoor yoga class
5. Discover something new
Be a tourist in your own city! Find something off the beaten path or participate in a local event. The point is to experience something new to you!
Examples:
- Trying that new Ethiopian restaurant with the cool murals
- A local festival, unique event, or architectural wonder in your city
- Getting a cocktail at the chemistry-themed bar
Benefits
This system works well for me because I know that I am spending my money and time on things that are important without overthinking. Usually, I can hit all 5 somethings without spending more than $150/month.
This technique also forces me to slow down my purchases. I want that new jacket? I already bought perfume for my “something for myself” this month, so I’ll wait until next month. Maybe I won’t even want the jacket anymore!
Here’s an example of my non-essential expenses from January 2023:
- Something for myself – East by Meera Sodha ($20)
- Something stressing me out – cleaned out my basement (free!)
- Something fun – a light show date night ($10 each so $20)
- Something for my health – ski pass ($60)
- Something new – Fondue restaurant ($30)
I only spent $130! I’m not breaking the bank and I’m not stopping myself from living life. Don’t forget to ruthlessly cut the rest!
What about you? How do you keep track of your fun money?