I used to pride myself on being anti-materialistic. Drunk on a newfound love of ’60s rock music and youthful, pseudo-hippie sensibilities, I pledged to remain disaffected by money’s influence, comfortably aloof from what I perceived to be a fruitless, one-sided relationship with something so fleeting. Unfortunately, only 17-year-old high school students living with their parents have the luxury of detesting money with such conviction.
While young adulthood rendered me incapable of remaining as down-to-earth as my teenage self would have liked, I came to regard money as nothing more than a necessary evil. That said, I chose to spend it with reckless abandon, as if negligence was the yardstick by which to measure my detachment. Armed with my first steady paycheck and an acute case of FOMO, I went to summer music festivals, bought clothes I couldn’t afford, and went on expensive weekend getaways. By saying yes to everything, I liked to think I was, in turn, saying no to a life bound by budgeting and personal finance apps.
What I was doing, of course, was digging myself a debt-shaped hole and proceeding to lie in it. While my experiences (and my stubbornness) are unique to me, I know I’m not alone in my financial faults. But having experienced the pitfalls that come with living beyond your means, I’ve resolved to walk away from my financial faux pas with a newfound sense of control over my bank account—a challenge that calls for a two-pronged approach that’s both social and financial:
While painfully obvious, there is truly no way to take control of your finances without first putting an organizational system in place; throwing caution to the wind will no longer cut it. At the most basic level, this includes confronting the beast head-on and taking an explicit inventory of your income and your expenses; not even an impulse chipotle burrito bowl should go unaccounted for. If you have to record your spending on a daily basis via the iPhone Notes app, so be it—the more meticulous you are upfront, the more headache you’ll save yourself in the long run.
This is where personal finance apps can come in handy—Mint, for example, links up to your bank account and tracks overspending according to a budget that you create. It will even send you alerts when you go over in any one category. If you’d prefer to make a budget the old-fashioned way, sans smartphone, try sticking to the 50/30/20 rule. In this case, 50% of your income should go to needs (rent, utilities, phone bill, groceries, etc.), 30% should go to your wants (concerts, dinners out, etc.), and 20% should go directly into your savings account.
In an effort to remove FOMO from my financial decision-making process, I began taking a full inventory of my social engagements ahead of time—especially before the busy summer months. Knowing exactly what lay ahead—socially and financially—made me less likely to blurt out a last-minute yes! to expensive weekend trips and Tuesday night concerts. This would ideally go hand-in-hand with the budget you’ve created for yourself, allowing your “expenses” category to realistically fluctuate depending on upcoming social engagements. While you can never truly prepare yourself for everything life will inevitably throw at you, having some sort of a plan in place will crush the financial blow.
This is where the FOMO part comes into play. I truly think that social media plays a role in the financial decisions we make—perhaps a larger one than we’d like to admit. From the amount of advertising we’re exposed to on various social channels to the coveted lives of the fashion, home décor, and lifestyle bloggers we follow, we may not even realize how many of our purchases are influenced by the handheld advertising agency we check up on 100 times a day. I’ve found that, when trying to keep my spending to a minimum, it helps to unplug from social media and focus on what I do have instead of what I don’t.
While I just learned the formal name of this trick, I found the 72-hour rule to be extremely effective when regaining control of my finances. Coined by Austrian psychiatrist Viktor Frankl and repurposed by The New York Times’ Carl Richards, the 72-hour rule means waiting a full three days before purchasing something you think you want. This has everything to do with taking advantage of the small space between stimulus (that new Marc Jacobs wallet in the store window) and response (buying it impulsively). Instead, go home, consult your monthly budget, and take note of all the other wallets you have. If you’re still dreaming of that freshly stamped black leather a full three days later, indulge (if you can afford it, of course).
When reflecting on how I managed to dig myself out of my financial hole, giving myself small rewards for good behavior had a lot to do with it. A true spender at heart, I felt it important to be realistic with myself about my spending habits—going cold turkey just wasn’t an option. Truth be told, I still wanted to live out my 20s with a shred of the spontaneous spirit that defined my younger years; doing so required a newfound sense of boundaries and self-control. Whether it was a nice lunch out or a post-work shopping trip, these small rewards kept me sane and helped me to focus on the end goal of financial stability.
Have you found yourself in a similar financial situation? Tell us how you dug yourself out of debt.