This past week I spent 4 days in Washington DC at FinCon, a conference where “money and media meet.” The conference was held at the Washington Hilton, where Reagan’s assassination attempt occurred and where many of the White House Correspondent’s Dinners and National Prayer Breakfasts are held. I was surrounded by famous and budding personal finance bloggers, podcasters and other content creators, advisors, coaches, media correspondents, journalists, researchers, and editors. We were all there for one reason: to learn how to create valuable content and better deliver a positive money message to people. There was a wide variety of movements and ideologies represented, but it was refreshing to be surrounded by those in the industry who are trying to help people live better lives in relation to money and their financial goals. These are money NERDS (and proud of it)!
One of the keynote speakers was Ramit Sethi, a NYTimes best-selling author. There was a powerful moment in his talk that got the attention of the audience of 2,500. This was a crowd in which some popular financial movements have taken ahold over the past few years, specifically the debt-free movement and on an even more granular level, the FIRE movement (which stands for Financial Independence, Retire Early). Some of these folks are what some would say extreme in their methods with regards to aggressive savings and frugal living. Ramit got their attention by explaining that years ago he was disappointed in the oft-repeated advice that if you just cut out lattes and "frivolous" items, you’d get to your financial goals. This didn’t reflect the life that he was living with his family and friends, often which included spending money while having fun and making memories together! He went on to develop one of his main pieces of advice, which in summary is to “spend lavishly on the things you love and cut costs mercilessly on the things you don’t.”
Here’s an exercise to consider: list all the categories you spend money on. Your categories can be as broad or specific as you want, some examples include travel, eating out, entertainment, clothing, electronics, cars, homes, spa services, gifts to loved ones, convenience services, charitable giving, health expenses, education, etc. Now rank them in order of importance to you specifically. Try not to think about what is important to others or how others may view you, but what is truly important to you. For the items that rank highest on your list, imagine what your life would be like if you could add money to those areas. For the categories that ranked lowest on your list, brainstorm ways you could cut costs in those areas “mercilessly.” As an example, someone may love dining out at Michelin-star restaurants, but has no interest in a luxury car, as long as the car gets them from point A to point B. In this scenario, this person should attempt to release their guilt in dining out, yet consider buying a low-end used car without worrying what others would think.
My spouse and I stumbled on this exercise a few years ago in a roundabout way. We took the “5 Love Languages” quiz and both chuckled when “receiving gifts” landed dead last on both of our lists. This simply means that we don’t naturally prefer to receive love via gifts. We had a frank discussion right then and there and decided to not give each other material items for birthdays and holidays. Instead, in typical millennial fashion, our gift money goes to experiences and events which we prefer anyway.
We don’t necessarily need to cut out all the joy in our lives when reducing our spending and increasing our savings. We may just need to shift our dollars to match our priorities and values. I hope this exercise gives you the freedom to focus your spending to where it will make the biggest positive effect in your life.
Until next time,
Diana Lormand, FPQP™
Director of Client Services
Baldrige Asset Management LLC is registered as an investment adviser with the SEC and only conducts business in states where it is properly notice filed, or is excluded or exempted from registration requirements. Discussions on our blog do not involve the rendering of personalized investment advice, but are limited to the dissemination of general information. A professional advisor should be consulted before implementing any strategy that may be suggested. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the adviser has attained a particular level of skill or ability.
Copyright © 2019 Baldrige Asset Management LLC. All rights reserved.