Learning How to Practice Thrift

Now, here’s some great advice that you can use… beginning today. It has nothing to do with feeling your feelings or getting in touch with your repressed infantile wishes. It has nothing to do with empathy. It has nothing to do with your ability to atone for your greed. It’s about recovering the outdated practice of thrift.

Yes, indeed. It’s about restraining your urge to spend. It’s about self-discipline and self-control. It’s about doing, not thinking or feeling. It’s about pausing and taking a deep breath before you spend.

The Wall Street Journal interviewed several economists and even one psychologist, asking them where the average individual can economize. In an era where our therapy culture has taught us to express our feelings, without filter or constraint, the virtue of thrift seems quaint and outdated. In truth, it is a great idea, great advice. I recommend it wholeheartedly.

I will share some of the advice, from different advisors.

To begin with, do you have too much house? Are you wasting money on its upkeep in order to impress yourself with how big you are? That is, do you feel like you need a big house to sustain your bloated self-esteem? The truth is, technology has made it less necessary to have a large kitchen, filing cabinets and large numbers of bookshelves..

So, point one:

Big houses are a waste. People are still in a mode of thinking about houses that is kind of 19th century. As we modernize, we don’t need all this space. For example, we don’t need elaborate kitchens, because we have all kinds of delivery services for food. And maybe you don’t need a workshop in your basement, either. You used to have a filing cabinet for your tax information, but now it’s all electronic, so you don’t need that, either. And bookshelves, for people who read a lot. We have electronic books now, so we don’t need bookshelves anymore.

From the big to the small, we waste an enormous amount of money buying Starbucks coffee every day. Add to that the expense of bottled water. So, brew your own coffee and drink filtered tap water. You will get rich:

Small-dollar purchases like coffee and bottled water. When you ask people why they don’t save, why they don’t invest, why they don’t use their 401(k) plans, the No. 1 reason is “I don’t make enough money.” Five dollars a day makes a huge difference. If you’re sipping a latte right now and you’re not saving, well, that’s dumb.

And then there are gadgets you buy to show off your virtue… even when you do not use them. Like the Peloton bike. We have all seen the ads. We find it incomprehensible that so many people are yielding to temptation and wasting money on these bikes:

You buy the Peloton bike for $2,000 because you care about your health, but you are not ready to do the hard physical work, so it sits in your basement.

And then there are the status purchase, the objects you buy to show people how successful you are… when you are not:

Compensatory purchases. Essentially anything that people use to signal to other people that they are successful in some domain because they don’t feel so successful in reality can be a compensatory product. So, conspicuous things like luxury goods and accessories that have big showy logos, to signal that they have money and social status.

And also:

To show that they are something, perhaps something they currently feel that they are not. In other words, to compensate for what they don’t feel that they have. We have found that people who have purchased items that symbolize a discrepant area of the self actually do worse in subsequent tasks, like solving math questions or persisting in a difficult task.

And now for your instructions. How should you go about changing your spending habits? Because, as the economists point out, profligate and wasteful spending is a bad habit.

Start by tracking where you spent money for a day. The fastest way to find money is to go through what you’ve already signed up for that you pay for automatically every single month. There are a lot of apps that make this easy.

Surely, it will help to keep a notebook or a file where you can see what you spend, on what, where and when. If you do it honestly, you will be horrified to discover how wasteful you are.

And the, meal planning will prevent you from making countless trips to the grocery store. If you take too many trips to the grocery you will be making impulse buys, wasting money and buying junk food you do not need:

Meal and grocery planning is one of the biggest ways to trim your budget. If you plan a week’s menu and grocery shop once per week for those items, you’re far less likely to stop at the store and spend on unexpected items.

And then there is the practice of self-discipline. Don’t get in touch with your feelings. Take a step back from your impulses and think before you buy:

Take 30 seconds just to notice the urge to make a purchase, and say: “Can I let this pass?” And if you can wait five minutes, you will very likely discover that urge to buy that thing will have come and gone.

As for the benefits of this wonderful advice, the Journal tallies up how much you would save, by not going to Starbucks every day:

$1,277: What you would save annually if you didn’t spend $3.50 daily on coffee

$85,305: What you would earn over 30 years if you instead invested the money monthly and earned an annual 5% return

Applying the same calculation to bottled water, you arrive at these numbers:

$548: What you would save annually if you didn’t spend $1.50 daily for bottled water

$36,608: What you would earn over 30 years, if you instead invested the money monthly and earned an annual 5% return

If you think that that is impressive, consider how much you would have if you cut out both Starbucks and bottled. Ka-ching!

Is that a sufficient incentive? Let’s hope that it is.