Discipline with money is a challenging practice, though once mastered becomes difficult to break. Whilst there are a number of benefits attached to a stricter spending approach, be aware also of the potential drawbacks.
• Lowers impulsive spending
Tailoring a budget to your needs, rather than being guided by your impulses means that the days in which retail therapy was actually therapy are long gone. Monitoring how purchases are covered within a budget will mean that you start weighing up need against cost and will naturally decrease the habit of spending for the sake of spending.
• Mental clarity
Suddenly there’s no fear when a bank statement shoots through the letter box; the cash machine no longer rejects you at the front of a long queue – the sales clerk’s frown as the card is declined is replaced by a smile as the payment goes through.
The greatest advantage of disciplined spending is the mental clarity it gives you. You are no longer involved in a game of Russian roulette with the bank balance. You know exactly how much you have to spend and know the consequences of straying from the budget.
• You have control
Having control over anything means that you are no longer its slave; the relationship alters and you have developed the upper hand.
You will probably notice that the emphasis you place on frugality through the week has led to a deep pot of coins by the end of the month; bills are covered on time – Christmas and birthday gifts are budgeted for and no longer bankrupt you a week before pay day.
• Encourages the end of unproductive habits
If you are carefully assessing what you need as opposed to want you may quickly find that unproductive habits such as smoking add up to more than you had previously recognised.
The need for such habits may dwindle when you see on paper how much of the budget they require. Weighing them against the endless list of preferable luxuries – holidays, clothes, new shoes – you might find that you want to cut out the habit and use the money to fuel the purchases that actually make you happy.
• You have more money
The addictive element of disciplined spending is what transforms it into a practice. Because the restraint is self imposed you develop a desire to make it work. And because it’s something you want to work, it does.
The upshot is that you have more money: when you keep an eye on every penny that goes in and out they are far harder to lose.
• Miser mentality
That eye that watches every penny might begin to wince at things it used to dilate at. It’s quite spectacular how quickly previously routine purchases become off limit luxuries. As much as it is sensible to assess the need before spending out, refrain from guarding the money as though it’s a prisoner in a high security lock-up. It’s just currency. And you were probably far more reckless before.
Letting someone else pay for a lifestyle that you can’t independently afford won’t teach you much. Money is still being spent even if it is coming out of someone else’s pocket. It’s much harder, but better in the long term to adapt your lifestyle to your financial means. Let people pay for you as a treat – not as a matter of course.
• A loss of routine
All sorts of things can cause you to lose discipline – work related stress, a holiday, grief, a break up. Particularly where the interruption causes a change in circumstances, trying to maintain disciplined spending feels neither difficult nor, in the grand scheme of things, very important.
The cycle of emotional downturn leading to a personal financial downturn can be managed through the significance you place on savings in better times. That way when a life changing event takes place and discipline goes out of the window, there’s a buffer by way of the treasure chest you’ve been growing.
• The frenzy of rule breaking
Even when you have set the rules yourself there is a thrill in tearing through them and spending as though it’s the last day on earth. This is why it’s important to include a ‘treats’ or contingency amount to your budget.
There’s nothing quite like the feeling of unleashed impulse buying. But just like binging two weeks into a diet, the impossibility of starting again the next day can put you off until the next personal financial crash.