In today’s economy, a WIT’s got to learn to cut back on spending (a lesson I am currently trying to teach myself- should you have any tips not found in the following post, please, please, please share! ?)
This Spring I read an article by U.S. News & World Report’s Kimberly Palmer (whose column online at www.usnews.com I read on regular basis and you should too) that touted the way to live “the good life on a budget.” Yes, easier said than done, but a WIT’s got to start somewhere, right? Palmer spoke with TheStreet.com reporter Farnoosh Torabi about how to live life in the fabulous lane.
An edited version of the original piece can be found below, but check out the whole article here. Consider it your guide to being a “recessionista,” which Glamour describes as “the most label-loving among us [whom] have been forced into bargains and budgeting.”.
Do you think it is really possible to live it up on entry-level salaries?
I do. Don’t get me wrong—having more money means you can spend money on more things. But the “good life” should not be about quantity. Rather, it’s about spending your time and money on the very things and events that make you feel happiest and most fulfilled.
I use the example of a young 20-something who was making very little money as a budding artist in New York City. She was sharing an apartment in Brooklyn, living very simply. Her good life meant having the opportunity to travel. By paring back on day-to-day expenditures, like meals out and cab rides, she was able to utilize her money toward a greater joy, which was taking weekend trips. In her mind, she was “living it up.”
You recommend defining a “hierarchy” of needs and wants—what does that mean?
The hierarchy is all about discovering what’s important to you—and what you can’t live without.
Saving and paying down debt should be at the top of everyone’s hierarchy of needs. After that, it’s all about you and your definition of the “good life.” What are your values? Where do you see yourself in the next five years or so? Questions to consider include: Do I want to go back to school? Do I want to move? Do I want to travel more? Do I want to start a business? Do I want to buy a house? Then figure out what in your immediate spending world is or is not contributing to those goals. That’s how you can then develop this hierarchy—and begin spending and saving in a more self-tailored way.
What are examples of easily overlooked items that people might want to consider cutting from their budget so the money can instead go to something more meaningful to them?
It’s easier to give advice once you know each person’s “good life.” But there are some general things to consider:
Gym memberships. The average person visits the gym just four times a month. The average gym membership is about $60 a month. You can do the math. If you can’t remember the last time you hit the gym, consider canceling or getting on an a la carte system where you pay as you go.
ATM fees. I live by my debit card. I opt to use it in stores wherever I can in order to avoid the ATM, which charges me on average $2 a withdrawal. In some cases $3! If you hit the ATM once a week, that’s at least $100 a year in fees. In 10 years, at a 3 percent interest rate, that $100 a year becomes close to $1,200! Or if you want, it’s $100 toward last month’s Visa bill…or if you’re debt free—a one-hour facial at a fancy spa.
Purchased books and DVDs. The library is becoming more popular with the under-30 crowd these days. No joke! If you’re a bookworm, get a free library membership and instead of spending $20 to $30 a month on a couple of books, get them free from the library. Same goes for DVDs.
Adult beverages. You can slice your dinner bill in half at the restaurant by nixing two glasses of wine.
If you want to make a toast, consider a BYOB restaurant instead. Know that, as a way to profit, restaurants and bars jack up wine bottle prices by three to four times what you’d pay in the liquor store.