Business Spending Dos and Don’t on a tight budget.

If you have a dollar and a dream, this one is for you!

person holding bank card
Photo by Anna Shvets on Pexels.com

This post is for my friends with a dollar and a dream. For the person who really wants to start, promote, or elevate their business on a tight budget. To be clear, I DO think you need to spend money to make money. If you are spending money that leads to growth though, what you’re really doing is investing in your business. Depending on how much money you have to invest, there are certain things you can do on your own or do without.

With that being said, the first step is creating an expense budget for your business. I’d recommend using the Profit First model (this model says you should only spend 30% of your revenue on expenses). For example if your revenue is $1,000/month then your expense budget should be $300/month. Now if you still aren’t making revenue, then use your targeted revenue to make your budget, for example, if you’d like to be making $300/month, budget your expenses at $90/month. I like this method because it’s simple and it helps keep expenses low.

What categories should you include in your expense budget?!

There are 3 major areas that entrepreneur and star of The Profit, Marcus Lemonis, says he focuses on in his businesses — people, product, process. I’m going to add two more— marketing and branding. Again, your budget will determine how much can go towards each of these 5 categories (if anything at all)).

Dos and Don’t when the budget is tight.

People

Hiring people could speed up your progress and free up some of your time to do more important tasks than the task at hand (e.g admin work, social media posts). The problem is that the budget might not allow for additional staff or even consultants. For this category DO use contracted workers for special projects when necessary. For example, occasionally hiring a photographer for professional pictures of a new product could be worth the one time expense. DON’T hire additional staff or ongoing consultants until your budget allows.

Process

Process refers to all the administrative tasks and tools you use to make your business run well. This includes things like your scheduling system (if your business is service based) or your website. DON’T just sell your products or services for free on social media without purchasing a website. You don’t own anything on social media and you could lose all your followers (and sales) without notice. DO create your own website to protect yourself from losing your potential clients and revenue streams. DON’T use a free website. The free version will not let you use a unique domain and will likely include a watermark on your website. This gives your brand an amateur look and decreases credibility. Besides, websites are relatively inexpensive— you could sign up for a Shopify store right now for as little as $9/month. DO use other free tools, such as email marketing subscriptions and scheduling systems, when you are first starting out. DO upgrade once your income increases.

Product

If you are a new business owner, you need to make sure your products are good quality and something that your customers would recommend to their friends and loved one. DO research supply costs for your specific product and compare that to the market value and your budget. DON’T select cheaper materials that will cheapen the look, feel and application of your product and disappoint your customers. DON’T be afraid to spend a little extra making a really great product, especially since word of mouth, reviews and recommendations are still the best ways to sell products and services.

Marketing

Since we are talking about spending in this post, marketing in this context is paid promotions i.e ads. It is important to be strategic and intentional about your marketing strategy, especially on a tight budget. The U.S Small Business Administration recommends spending between 7-8 percent of gross revenue on marketing, however, most of the available research shows that small businesses spend just around 1%. No matter what your marketing budget is, you want to make sure each dollar is working hard to make you a sale. DO take your time learning about ads management. DO make sure you understand how to read your ads data and how to adjust your ads for maximum return on investment. If you’d rather not learn how to manage ads, DO hire an ads specialist. If you don’t have the budget to hire a specialist, DON’T run ads. Ads are dynamic and their effectiveness can change over time, so it is very important to learn how to set up and interpret your ads or hire someone who can.

Branding

Branding refers to your graphics, your designs, your business’ overall esthetic. There are several tools that offer free templates for creating an appealing and cohesive brand. DO start off using free tools like Canva to create your graphics and other designs. If you have some funds, DO use services like Fiverr or 99Designs to hire a one time, inexpensive designer that can create a brand kit for you to use in all your graphics. DON’T hire ongoing designers until your budget allows.

Summary

In the end, you can run a successful business with very few expenses— just keep in mind that if it doesn’t cost you money, it will likely cost you time. From the five categories mentioned, you can save the most money on people and branding. I’d recommend spending a little bit of money on process, especially on creating a professional looking website and an email capturing system. And finally, you should spend the bulk of your money on making a phenomenal product and on making effective ads that will convert.

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Cat Marte is a Small Business Coach + Social Media Strategist who helps success driven people launch and grow their small businesses using online marketing strategies. Book your free introductory call today.

Avoiding burnout as a new entrepreneur

Have you ever been SO excited to start a new project or opportunity that you just poured yourself into it and got lost in that world for days, weeks, maybe months? Then all of a sudden you feel really unmotivated, irritable, stressed, and anxious? Yup, that’s burnout. How can we avoid this terrible crash while still maintaining high productivity— especially as aspiring or new entrepreneurs?

Wouldn’t it be amazing if we all had profitable online businesses and free time to do the things that we want to do without the burnout? Fortunately, this is totally possible if we equip ourselves with the right processes and systems to make it happen. I learned this the hard way after a full year of working nonstop to get my blog up and running and promoting my services on instagram and facebook and all the other places I thought I needed to be at once.

In my video below, I talk about 3 things you can do right now to avoid burnout as an online entrepreneur and/or hobbyist. This is a little snippet of my new hybrid training course where I do a a little bit of training and a little bit of coaching to help you take the guess work out of running your online business. 

In the video I cover limiting behaviors that stop us from reaching our full potential; one of the best ways to increase productivity while decreasing burnout; and an important step you should take to help grow your online business. For more tips like this, stay tuned for my new hybrid training course.

On payday I did what I usually do and filled out my budget spreadsheet, making calculations and adjustments and more calculations and more adjustments till it dawned on me that I am borderline obsessed with my budget (remember what I said about being obsessed with your goals?). I check it at least once a week and adjust as needed. I don’t know what life would be like if I didn’t have a budget…no wait, that’s a lie, life would be a mess, that’s what it would be. My budget is the holy grail of money in my life. With a tremendous amount of mental shifting and pain taking effort, I’ve finally instilled in myself the mindset that if there ain’t room in the budget for it, it ain’t happening— full stop. The fact is that budgeting is not something you do, it’s something you subscribe to. It’s a mindset. And if you don’t have a budgeting mindset then it won’t matter how many different budgeting plans you try, it will never help you stay in budget. 

Why budget? 

It’s tempting to think of a budget as something restricting when in all actuality it’s freeing in a lot of ways. When you budget, you don’t have to worry about over extending yourself and creating future debt for future you. You also inevitably cut out all the things that were nice but not necessary, leaving more room for all the things that are great and by their greatness make them necessary. For example, I used to go get manicures and pedicures all the time, and that was nice. Was it amazing? Not really. Did it fill my heart with joy? Eh. This might not be the same for everyone; someone else might treat getting their nails done as their ultimate treat/self care/self love routine, and that’s great! The key is to find what makes YOU happy and make room for that in the budget by taking out all the things that are just eh. 

Who budgets? 

Let me tell you a secret, not so secret: anyone with a significant amount of wealth, either in liquid assets or fixed has a budget. Sometimes it’s called an accountant or a financial advisor, but all it is is a budget! Another way to think about it is money management. How are you managing your hard earned funds so that you get the most benefit out of every dollar? The bottom line is, if you care about building wealth then you’ll budget your money, that’s who budgets…

My 4 Budgeting Rules 

  1. Adjust all of your expenses to occur during a one week period. This is the foundation of the budgeting plan I’ve laid out in rules 2, 3, and 4. It works is by giving you time to earn and plan for every dollar you make in a given month, and then pay all your expenses at once. This works really well for me because I get paid monthly (I know, at first I though WHAT THE HECK??). When I get paid at the end of the month, which happened to be Wednesday this month, I sit down and fill in my budget, then I go ahead and pay all my bills which are all conveniently due between the 1st and the 7th of the month. Once everything is paid and done with, I don’t have to think about a single expense for the rest of the month. For those who get paid weekly or bi-weekly, the same end result can be accomplished by setting all your expenses to be due at a particular time (say the end of the month) and then setting money aside each week or whenever you get paid to cover those expenses. This method avoids having to use one paycheck to over a big expense like rent or car insurance. Another way to think about it, is that you are creating weekly/bi-weekly sinking funds for your monthly bills and expenses. In 2, 3, and 4 below I’ll show you how it works.
  1. Plan for fixed expenses. You know every first of the month the rent comes knocking at your door, so why aren’t you prepared? You can reduce your money related stress by simply planing ahead. If you get paid weekly, you can take out 1/4 or 1/5 (depending how long the month is) of the rent money every paycheck. Say your rent is $800/month and you make $600 a week, you can set aside $200 a week to pay your rent, by the time the first rolls around you’ve got all you need and don’t need to scramble to come up with rent money or spend an entire paycheck and then some on rent. Same applies to their fixed expenses; if you know you pay $65 a month for your cell phone bill, you can put aside $15 dollars a paycheck (I promise you won’t even notice) and again by the time you come around to pay your cell phone bill, you’ll have all the money needed. Let’s use my income and expenses as an example.

I take home about $750/week and pay $1,200 in rent, $65 for my cellphone bill, $80 for internet, and $104 for car insurance monthly. In order to accumulate the payments for my fixed expenses throughout the month, I’d have to save 1/4 of all my fix expenses each week. That comes out to $362.25 a week for fixed expenses, but we aren’t done yet.

$300 Rent
$16.25 Cellphone 
$20 internet 
$26 insurance 
Total $362.25
Remainder $387.75
  1. Pay yourself first-ish. Some people say you should always pay yourself first, but I’m more like “I before E except after C” kinda girl. In other words, I like the idea of paying myself first but only after I’ve secured my basic needs. Without meeting your basic needs how can you accomplish any money goals when you’re only just surviving? So I like to make sure my rent money is situated, for example, before I get carried away paying myself first. When it comes time to figure out how much I should be paying myself, I decided on a percentage. At the moment, I am paying myself 5% of my paycheck to myself.This may seem small to some, but I rather err on the side of realistic and accomplishable. There have been many a time where I’ve tried to really stretch my goals, only to disappoint myself. I’ve basically learned the hard way that it’s better to start small and work your way up as oppose to starting too high and falling flat on your face. Let’s continue with my budget as an example, if I put side 5% of $750, I get $37.50, with my fix expenses, that brings my remaining balance down to 350.25 per week.

  1. Plan for Variable Expenses. Plan for variable expenses last because they are often more flexible and can be adjusted as needed. For instance, credit cards are variable expenses— sometimes you pay well over the minimum, sometimes you pay the minimum and sometimes you don’t owe anything at all. Because you won’t know with certainty how much you will owe in variable expenses, it’s good to set aside a percentage of your income to cover the amount that is equal to or greater than your minimum due. For example, I have 5 cards, the minimum combined of all 5 is $130 per month, so depending on what else I have going on that week, I may set aside $32.50 (1/4 of $130) or I may set aside a little more because I know I have nothing going on that week. This brings our remaining balance down to $317.75.

Depending on your family size, $317.75 may seem like not enough or more than enough. As a single person with no children or other dependents other than my dog, $317.75 per week is more than enough to spend on groceries, gas, entertainment, etc. The best part is that I know I’m putting money aside for upcoming expenses and do not need to stress out or over extend myself when it’s time to pay up.

The Bottom Line 

I’m not a financial adviser nor do I claim to know anything beyond the basics. With that said, I’ve been budgeting for a good 10 years now and I’ve learned a thing or two about what works for me and what doesn’t. I’ve basically taken the advice of the Dave Ramseys of the world to make my own plan and my own financial path. Hopefully this plan can serve as a guide or a starting point for others looking to get serious about their budgets. If you’re ready and excited to have the best budget game you’ve ever had, you can download my free simple budgeting guide to help you get started. 

Let’s be real, I was broke till not too long ago. But no more. I’ve been learning the ways of the rich and I’m here to share these golden secrets with you. It’s actually not a secret at all —the rich love to talk openly about how they got to where they are. You know what it is? It’s hard. That’s the real barrier to entry. The rich can feel comfortable sharing all their secrets because most won’t listen and those who do won’t follow through. It’s why the rich get richer and the rest of us resent them.

How Not to Get Rich

Sometimes it’s not about what you do or don’t do, but how you think. I first learned this lesson in Robert Kiyosaki’s Rich Dad Poor Dad. Most notably, he said his rich dad thought he was rich before actually being objectively rich. He didn’t say “I will be rich” he said, “I am rich.” Right now I’m reading Napoleon Hill’s Think and Grow Rich and it’s the same deal— those who believed without a plan B that they will accomplish something, inevitability accomplish that something. If you don’t have the rich person’s mentality, you lack vision and therefore cannot grow rich.

Most of us cannot conceptualize this mentality because we see things at face value. How am I rich now if my bank account is empty? To us, being rich is an objective, observable and measurable thing to be. You are rich if you have X amount of money and assets, full stop. The secret here is that being rich is NOT a status, it’s a mentality. In Think and Grow Rich, Hill describes it as desire plus faith. If you desire something deeply AND you have faith you will get it, it will come. Of course not magically out of thin air, but it will come eventually because with desire and faith, you will keep working and working at it until it comes true. If you don’t desire with relentless faith, you lack commitment and therefore cannot grow rich.

What I’ve come to accept despite my reluctance is that commitment is not enough. You could be fully committed to accomplishing your goals and end up getting knocked down so many times that you eventually give up. Say your an actor whose gone to 300 auditions and never had a call back, would you go to the 301st audition or would you finally call it quits? If you’d call it quits then you do not have a rich person’s mentality. Rich people are winners and winners don’t quit. According to Hill, Thomas Edison failed at inventing the light bulb over 1,000 times before he finally get it to work. If you quit, you lack perseverance and therefore cannot grow rich.

Rich Habits 101

People don’t grow riches, riches are inside all of us. Maybe your parents or your community didn’t teach you how to foster a rich person’s mindset but it’s never too late. It all starts with your mindset. You can cultivate this mindset by doing as the rich do.

  1. Hone in on your problem solving skills
  2. Change your spending habits
  3. Keep learning and Think Smart
  4. Obsess over the goal
  5. Be flexible

Hone in on your problem solving skills.

Poor dad thinks, well this was the hand that I was dealt, can’t do much about it, while rich dad thinks, I am rich, I just need to get the money to show it. Poor dad thinks, can I do this? Rich dad thinks, how can I do this? Problems are only problems because we don’t know the solutions yet. According to Kiyosaki, the rich do not disengage when there are obstacles, in fact, that’s when they lean in. That’s why it took Edison over 1,000 tries to figure out the lightbulb. Smithsonian Magazine reports a quote of Edison saying “I have not failed 10,000 times—I’ve successfully found 10,000 ways that will not work.” It’s the kind of mindset that fuels perseverance and that never give up attitude that allows failures to turn into lessons and lessons to turn into riches.

Change your Spending Habits.

Here’s a practical one. It’s not all in your head, you do also have to make literal changes to grow rich. I dive deeper into this topic on my post, Your Broke because You Act Rich, Except Rich people don’t act like that. One common mistake people make is living at capacity, or in other words, spending every dollar you make. When you live at capacity, you don’t have room to save and then what happens when you need money for an unexpected expense? You go into debt, that’s what happens! Even if tomorrow you start making loads more money, if you aren’t careful, you will experience lifestyle creep, where your spending habits re-adjust to match your income and your back at capacity. Changing your spending habits so that you live under your income capacity is a great way to secure funds for savings and cut out unnecessary (and detrimental) spending.

Keep Learning and Think Smart.

Attaining knowledge is one of the first steps to attaining success and wealth. Of course, it’s not just about attaining knowledge, it’s about how you use that knowledge. As Hill said in his best seller, professors hold a great amount of knowledge but they get paid very little. Someone who doesn’t hold half the knowledge of a professor but thinks smart has the potential to make triple that of someone who knows many things but not how to use them. The trick is to know what to do with what you know and to know when you should enlist in someone who knows more. For example, I know from experience if I have a salaried job I can easily do my own taxes because it is not very complicated. On the other hand, if I am self-employed, I should hire a professional that can help me get more bang for my buck and masterfully work through a more complicated process. In this way, thinking smart is simply knowing how to use what you know and what others know to your advantage.

Obsess over the goal

No one accomplishes a really hard goal that they are mildly interested in. First of all, if it’s extremely difficult or seems impossible (like building generational wealth) only someone that is unapologetically obsessed with accomplishing it will get it done. That’s why Bill Gates and Paul Allen spent day and night working on a software for a micro-computer that was more sci-fi than reality at the time. Gates and Allen were not only obsessed with the goal, they’re entire futures were resting on this goal. That’s the type of energy and weight needed for someone who wants to see their dreams come true. Let’s be clear here, it’s not just Harvard dropouts that make their dreams come true; Eminem started off with major disadvantages as a poor, white kid with nothing but a dream, only to become one of the most widely recognized and acclaimed lyricists in his genre. His story of rags to riches, like so many others, speaks to the tunnel vision and ‘can’t give up’ attitude that can bring you success and prosperity.

Be Flexible

Don’t be flexible with your goals, be flexible with the means. I once interviewed the CEO of a company I worked for and she said something I’ll never forget. She said, I am where I am today because I always said yes first and figured out how to do it later. She said first they asked her to open a branch office in another town she’d never lived in, so she said yes and then she learned how to open a branch office; then they asked her to manage the team at the branch office so she said yes and then she learned how to manage the team; then they asked her to be the director, she said yes, then they asked her to be the CEO and she said yes. Along the way she was asked to do so many other tasks she’d never down before but she said yes anyhow. The point is not to go around saying yes to irrelevant things, but to be flexible and take risks, learning as you go.

The Bottom Line

I hope everyone gets a few takeaways from this post, but most importantly, if you want something enough and you are willing to work hard for it, push through the lows and keep moving, you will get there. As humans we all have doubts, but our courage has to be stronger than our doubts. Most importantly, we have to believe more than anything that we will get there.

Two words: Delayed Gratification.

This message really spoke to me in Robert T. Kiyosaki’s  Rich Dad, Poor Dad and I feel it was one of the major things that separated rich dad from poor dad. Even in the beginning before any lessons were taught, he talked about how rich dad lived in a smallish, beatdown house, whereas poor dad had a nice-ish house. It’s the classic “Keeping up with the Jones” that I talked about in my post, “You’re BROKE because you act rich.” Turns out, rich people don’t “act” rich—at least not until they are rich.

It’s not your fault you’re broke. Mostly not your fault anyways. The problem is systemic; our entire system is set up so that we spend, spend, spend. Have you ever wondered why its called a “stimulus check,” and not an “investment check?” We need to spend all our money so that the big businesses always profit and the 1% get richer, meanwhile we work hard for the rest of our lives, never stopping to wonder why we’re in the position we’re in and not better off. Again, it’s systemic; we aren’t taught to think of money working for us, instead, we’re taught to work for money. We aren’t taught to play the long game, we’re taught instant gratification—more now, worry about later when we get there.

The advice is always the same; go to college, work hard, make a decent living, be happy. The reality is that a lot of us (myself included) struggle tremendously with budgeting, saving, building wealth. A lot of folks are just trying to make ends meet and survive the workweek without losing their grip and that’s the way corporate America likes it. If you are reading this and thinking, woah conspiracy theorist over here, take a moment to think about why public schools don’t teach financial literacy? According to a February 2020 article by CNBC, only 21 states in the U.S. require a personal finance class in high school, stating “By fulfilling a state-requirement as middle-schoolers, they’re learning skills that will have life-long implications for their future finances.” I don’t get it, “life-long implications for their future finances” but less than half of U.S. states require learning personal finances in school?

Conspiracy theories aside, if you aren’t financially literate, you should start educating yourself sooner than later. It’s never too late to start investing in yourself, even if you’re of retirement age, what you learn can be passed on to generations after you. I always go back to this quote I posted in, “One of the Most Important Success Habits” where Mark Cuban says, “Everything I’ve read was public. Anyone could buy the same books and magazines. The same information was available to anyone who wanted it. Turns out most people didn’t want it,” to make the point that knowledge is free, and access to knowledge is mostly free, but few want to access it.

Start Here

If you’re reading this post, I can only imagine you are interested in improving your financial situation but don’t know how. I already touched on the first step and that is to educate yourself. Just as you cannot win at tennis if you don’t know the rules, you cannot build wealth if you aren’t financially literate. In order to know what you are up against, you need to remove the blindfold that’s been keeping you in the dark and arm yourself with the knowledge to accomplish your goals.

Create a Plan

Planning is an invaluable skill because it acts as a roadmap to your goals. The best way I’ve found planning useful is by starting at the destination: what are your goals? What is it you are hoping to accomplish? There are several goals you can be working towards, like building a savings fund, paying down debt, building passive income streams, etc. Taking a moment to mentally prioritize what’s most important to you is step number 2.

Put it in practice

Goals are easier said than done. Educating yourself and creating a plan means nothing if you aren’t taking action. I’m the first to say I mess up my plan and set myself back all the time. It’s inevitable but we have to keep on going if we ever want to make progress. Not only do I have to keep going, but I have to keep reminding myself of where I’m going. Step 3 is all about moving forward.

We ain’t meant to be rich

Despite all the rags to riches stories we hear all the time, the systems in place aren’t set to make us all rich; they are set up so that the rich get richer and everyone else stays in place or worse. As the non-wealthy, we have to work harder to get out of the noise bleeds. The good new is that those rags to riches stories exist because folks were successful in making it to the top. It’s not impossible, but it takes the kind of of time, effort, sweat, and disappointment that not many are willing to swallow.

Things you learn after it’s too late: Building an Emergency Fund

When it comes to money, I have two goals: build wealth and pay off debt. To achieve these goals, my money is calculated down to the last dollar. You want to know what I didn’t calculate for? Coronavirus. The only other time I’ve been around for a major recession I was 16 years old. This time around, when the recession inevitably knocks on our door, I’ll be kicking myself for not planning.

They say (they being the “experts”) that you should have at least 3-6 months of living expensive in your emergency fund, yet according to the financial site MagnifyMoney, of the Americans who have savings accounts (because many don’t) the median savings is $4,960. In other words, from the 50% of Americans who do have a savings account, only 50% of those have over $4,960 in their savings, or in other, other words, about 75% of Americans have fewer than $4,960 in savings. Not only do I not have $4960.00 in my savings, but that amount would only cover my expenses for a month and a 1/2—maybe…

Let’s do some math

I make $50K a year in my regular 9-5. After taxes I make $3K a month. Unsurprisingly, I have a ridiculous amount of debt, starting with student loans. Here’s the breakdown:

Income to Debt Ratio
Income$3,000.00
-Rent $1,200.00
-Internet$80.00
-Cellphone$67.00
-Car Insurance$114.00
-Car Note$200.00
-Credit Cards (Minimum payment) $137.00
-Personal Loan $344.00
-School Loans $200.00

After I deduct all my fixed expenses I’m left with $658.00 a month. Of those $658 I also pull some out for sinking funds, my Acorn account, and unexpected expenses (I’m looking at you medical bills!). So really, I’m looking at around $350-$400 a month, you know for food and gas and basic day to day survival. Not really sure where I’m suppose to pull emergency fund savings??

In the name of transparency, I am “saving money” through my 403(B) retirement plan, my Acorns investing account, my Capital One 360 CD, but none of these channels are easily accessible (which is how I like it!) and would not be quick and easy ways to get a hold of money should there be an actual emergency.

Let’s be real, I never really gave it much thought! If you think about it, my goals are focused on the future (building wealth) and on the past (paying off debt), but if I don’t start focusing on the present, any little thing could annihilate all my financial goals. This really hit home when $h*t hit the fan with this pandemic. We are at such a vulnerable time right now, whether it’s our job security or our health on the line, it’s so important to be prepared.

What Can I Do Now?

Not knowing what the future holds, I’m definitely going to take some measures to prepare for the worse. Based on the information I know so far, I plan on 1. Calling my student loan provider and halting my student loan payments. Because the Federal government announced it would freeze interest on federal student loans, you can temporarily go into emergency administrative forbearance without penalties. Doing this for at least 2 months will save me $400.00. 2. I am going to call my other loan providers for my car note and my personal loan to see what I can do to halt or lower my payments during this crisis. 3. I am going to throw that “stimulus check” right into my savings account.

The Bottom Line

I’ll never forget the 2 years my dad was unemployed during the 2008 recession. For me, planning and thinking ahead is a great was to reduce anxiety about the future. Reducing or postponing those 3 payments could help me build up a small emergency fund of $400.00- $1500.00 for the ghost of recessions to come. It also makes me feel proactive and productive during these times of uncertainty and unrest. Other things to consider are calling your credit card companies, internet provider, cell phone provider, and any other services you pay for to see how they can help. It may sound clique at this point, but we really are all in this together and I’ve found in my experience that companies are usually willing to work with you, especially during times of universal turmoil.

What is Zero-Waste?

It all started with composting. Naive little old me, I just thought it was a nice idea that my food scraps could be reborn into soil. Next thing you know, I watch a documentary that debunks the glories of recycling and BOOM, I’m suddenly falling deep into an investigative youtube rabbit hole about all things zero-waste.

The first thing I learned was that “zero-waste” is a sham. The concept, at first glance, suggests that people are truly living life with just a jar full of trash, not accounting for their recycling (that may or may not end up in the landfill after all), and the trash that they managed to re-purpose, such as glass food jars or old t-shirts.

Turns out the term zero waste is better defined as “environmentally conscious consumerism.” It’s about using your buying power as a consumer to support conscious brands, such as those who void plastic packaging and unsustainable manufacturing practices. It is also about embracing Recycling’s 2 sisters who are often ignored— Reduce and Reuse. More specifically, reduce your single plastic use and waste by replacing with non-plastic, reusable alternatives.

Cons of Zero-Waste

Besides the completely misleading and slightly obnoxious name, the zero waste movement has quite a few downsides. For starters, when I first began researching zero waste living, I became extremely overwhelmed and anxious because I felt that every aspect of my life was producing enormous amounts of waste despite having considered myself an eco-conscious consumer in the past. EVERY SINGLE THIING I used seemed to be on the naughty list, starting with my single use plastic dish soap down to my hair ties.

Once I decided I was going to change my ways, I ran into another problem; zero-waste living is not widely understood or embraced, so finding alternatives is a challenging and time consuming process. I happen to have alot of free time on my hands and, not to mention, am very invested in the cause, so I’ve spend hours and hours researching different brands, ideas and, tricks on zero waste living. The issue is that the average person who might have a demanding job, a family, a pet, debt, a wedding coming up, a funeral coming up, a birthday, you name it—that person, doesn’t have the time or the energy to look up mom and pop small businesses in Portland that specialize in making solid dish soap.

The movement is not only difficult to implement, it is also limited to the highly educated and privileged. I tied to explain to my mother why plastic bags are to be considered pure evil and she countered by saying plastic bags are great because then you can reuse them as trash bags for your bathroom bins, to which I replied that your bathroom bin doesn’t need a trash bag at all because it’s all dry waste and when it’s full you can just add it to your KITCHEN TRASH BAG AND REDUCE YOUR PLASTIC BAG CONSUMPTION!!! To which she shook her head and walked away. As you can tell, I was exasperated and defeated.

In order to grasp the concept of zero waste, you have to first understand the gravely of global warming, our failing waste management system, the pitfalls of recycling, and our own unhealthy relationship with consumerism and buying shiny new things. My mom is a great example of how zero waste is not for the under educated; she’s an immigrant, hard working, caring, strong, independent women, but she didn’t make it past grade school and believes everything she hears on cable news. AGAIN, the average person may or may not know some or all of these things, and usually the more you know has a positive correlation with your education level and your privilege.

The last pitfall I can see in the zero waste movement is it’s potential to become a niche consumerist obsession. On the several zero-waste online stores, and even at your local organic food store, you can find fancy bamboo cutlery to-go kits, fancy coffee travel mugs, muslin produce bags, the works! There is a “green” solution for everything, even things that don’t need a solution, like your hair ties for example. There’s so much stuff out there that you can buy to “substitute” your plastic, that if you swapped everything out all at once, you could spend a couple hundred bucks easily. And going back to my first point, I was so anxious about all of my plastic consumption that I almost did just that.

Pros of Zero-Waste

I started with the cons of zero-waste because I think the pros are more obvious. While this list is shorter, it’s my opinion that the impact of living zero-waste outweigh it’s pitfalls. First off, reducing our single use plastic consumption is a major benefit of the zero-waste movement. PERIOD. In the big picture, being more conscious (and pickier) about what we buy can have a tremendous positive effect on our money management and our waste management. Not only do you not need another tub of hair gel for your collection, but it’s packaged in plastic so you definitely don’t need it.

Zero-waste living helps you shift your mindset and focus less on stuff (buying stuff, having stuff, throwing stuff away) and focus more on the important things in life. And if you care about the environment, you will also gain piece of mind knowing you are, at bare minimum, not contributing further to the problem. Most importantly (for the purposes of this post), switching over from single use items to reusable items can save you lots of $$$ long term.

Zero Waste Life Hacks to Save you Money

Number 1: USE UP ALL YOUR PRODUCT BEFORE REPLACING

We live in a society obsessed with buying new things— even if they are used, in our minds they are new to us. It’s the consumerist society that the top 100 corporations responsible for most of global warming thrive on. The good news is that zero-waste living can help reduce this. I made a vow to myself that I would not buy anything new until I was completely out of the product. This goes for soap, groceries, toothpaste, cosmetics, and anything else I buy. Not only has this helped me reduce my waste, but I’ve had to think long and hard before I buy anything knowing that I won’t replace it until it’s finished. From what I’ve learned, this concept is super important for newbies in the zero-waste community, especially those who seek to replace all of their non-zero waste items with fancy new ones. The idea is to reduce your waste, so you shouldn’t throw something out that you could have used just to buy a new “eco-friendly” version.

Number 2: DON’T FOLLOW THE HYPE

I saw these really cool “unpaper towel” rolls on Etsy that looked just like paper towel rolls. All the vendors had cool designs and button snaps so that each “sheet” snapped together and some of them came with a reusable tube to roll your unpaper roll onto. These 6 towel rolls were being sold anywhere from $30-60 dollars. The cheapest I saw was $26 dollars. Then I went on Youtube and saw how to make them, essentially cutting up a towel into squares and sowing flannel to one side for decoration. I loved the idea but I didn’t want to throw down $50 bucks for a glorified hand towel. This is a prime example of how marketing can get you! I decided I wanted to get rid of single use paper towels but didn’t need fancy print imitations, so I went to Target and bought two packs of square kitchen towels and a small decorative basket to have in my kitchen for the soiled towels. The 100% cotton kitchen towels came in a pack of 6 for $1.99 and the basket cost $8.99, for a grand total of $13— half the price of the cheapest “unpaper towel rolls.”

Number 3: SERIOUSLY, REDUSE & REUSE

There are a few front runners out there for reusable food and beverage containers, such as collapsible food containers for travel, reusable silicone sandwich bags, bamboo cutlery kits, travel coffee mugs, etc, etc. The fact is, you probably already have food containers at home, you already have silverware, and you already have many of the things you need to be zero-waste. I, for example, make my coffee at home every morning and take to work in a travel mug, saving me tons of money. I also have a small food container that isn’t quite the same size as two slices of bread but close enough. If I was ever so inclined, I could also pull out some silverware from my kitchen and stuff it in my bag— but I don’t really buy takeout so it’s a non-issue. The moral of the story is…keep it simple, don’t buy things just because they seem cool, and think about the things you already have that might replace single-use.

Number 4: WHEN YOU MUST BUY, CONSIDER THESE MONEY SAVING TIPS

A few things I’ve learned on my journey…

  • At the supermarket, shop the perimeters. This is usually where all the fruits, vegetables, bread, and dairy products are and where you’re more likely to find unpackaged food (i.e less plastic). Shopping only the perimeter will definitely save you money because of how much it will limit your options. Bonus, the unpackaged food is usually the healthiest because it is fresh and unprocessed.
  • When buying body products, such as lotion, sunscreen, hair products, etc, consider switching over to solids. Solid lotion, or lotion bars, are more likely to come wrapped in paper, as a bar of soap would be. You can also find solid shampoo and conditioner bars for all hair types and conditions, even hair products can be found in solid forms. Solid form products boast to last longer than their liquid counterparts because they skip the water and fillers and are highly concentrated, meaning you need less product. They can also be found for cheaper; the other day I bought a solid shampoo bar at my local organic supermarket for $5, whereas my regular liquid shampoo costs me $12. I also found a 3.5oz of plain, unscented Castile soap on Esty for $3, which is comparable to the cost of a regular sized liquid dish soap (that’s mostly water!).
  • I’m personally on a mission to switch out all my liquid soaps, detergents, and cleansers for solid bars, but if this is not the route for you, consider buying refills. Many brands offer refills in pouches that use 60% less plastic than bottles; some online stores also offer concentrated cubes that you can mix with water to create a liquid product and at least one company, Clean Cult, uses a carton instead of a plastic bottle. Refills are generally cheaper because they use less packaging and therefore cost the manufacturer less to make.
  • The last option, arguably the easiest but ultimately the least effective, is buying in bulk. Usually buying in bulk means it will still come in plastic but at least it will cut down on the plastic waste and save you some time and money. You can store the big container somewhere hidden and refill smaller bottles as needed.

The Bottom Line

So many people have been discouraged by the extreme level of commitment it would appear you need to be a true “zero-waster,” that now Zero-Wasters are having to do some serious damage control to explain the true meaning of the movement. For me personally reducing my waste has had the very pleasant side effect of saving me money, like never again needing to restock on paper towels. What’s really important is reducing your waste though. Every little bit counts and you don’t have to go crazy trying to radically change your life to be literally “zero waste.” It’s all a matter of positive psychology; don’t focus so much on what you are doing wrong, instead continue to improve what you are doing right. And remember, the more you lean into environmentally conscious consumerism, the more conventional brands will feel the pressure to change their unsustainable manufacturing and distribution practices.

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Bonus: Here is a great article I found on what it really means to be zero waste by Polly Barks: How to go zero waste on a budget. And here is another article I found useful by MoneyNing: 5 Ways a Zero-Waste Lifestyle Saves the Planet — and Your Money

Fitting Self-Care into the Budget

I’ve been obsessed lately with YouTuber and skincare enthusiast, @susanyara, and her channel Mixed Makeup. She’s constantly talking about the importance of self-care and feeling good about yourself. I have to say, I’m here for it. As someone who has always loved makeup and skincare, I was a bit hypocritical of people like Susan who spend ALOT of money on products and services that the “average” person would consider high end. Now I see that my perspective was too narrow, Susan says all the time on her channel, “If you can afford it, then why not? There’s nothing wrong with wanting to feel luxurious.”

I agree and disagree with that statement. Sure, if you have enough money and are financially secure enough to purchase the most high end, luxurious products for your own self-care, then why not? But I also don’t think it’s wise to go off spending on unnecessary luxuries just because. It’s one thing to buy a very expensive product that really works and a completely different thing to buy something fancy because, say, it smells nice. The latter, in my opinion, is mismanagement of funds.

Now, for us less lavished souls, self-care is obviously still important, and it’s not just about looking good. It’s a psychological phenomenon; when you look good, you feel good, and when you feel good, your entire outlook on life is positively effected. Not only that but taking care of yourself from the inside and outside creates a ripple effect that motivates you to also eat better, be more active and, vis versa.

Fitting it into the Budget

Unfortunately most of us cannot afford a $120 moisturizer or an out of pocket visit to the chiropractor. What we can do is budget, plan and adjust to our needs. For example, it is recommend to get a professional teeth cleaning every six months, but what if you don’t have insurance or your insurance doesn’t cover dental? It is also recommended to get monthly facials and to work out frequently. How can we fit everything we are “suppose” to do into our busy schedules and, most importantly, into our tight budgets?

Prioritize

Prioritize

Prioritize

If we had all the richest, then why not? The harsh reality is that we don’t, and yet, it’s still important to do something for ourself in the form of self-care. I like to pick at least three things that are important to maintaining my self-care routine while not breaking the bank.

Exercising

This one I have trouble actually doing and it’s the one that’s the easiest to do because it can be virtually free. The problem with working out at home for free is that I am not motivated to do it. When I know my hard earned money is involved, I am more prone to working out. First I find the most affordable gym in my neighborhood, my current gym is $24/month. Then I calculate that if each work out is less than something unhealthy that I’d rather be doing, my money is being well spent. For example, a medium dirty chai latte from Starbucks coffee is about $6. In this case each workout should be less than $5, meaning I’d have to go at least 5 times a month or about once a week. This is a realistic goal I can reach and it keeps me motivated to at least justify me spending $24/month on the gym instead of something unhealthy like chai lattes. This doesn’t necessarily mean I would have spent those $24 on Starbucks instead, it’s just a little Jedi mind trick I pull on myself to get motivated.

Skin Care Products

Skin care has always been important to me, but never to the point where I wanted to spend a ton of money on it. Now that I have more wiggle room in my budget, I’ve been putting more effort into it. I keep this expense in check by first, making a very educated purchase. If I am going to put the big bucks into a skincare product, I want to make sure I am buying the right thing for my skin type and needs. I will thoroughly research products before purchasing them. Once I find the right product, I won’t buy right away! I will fit the purchase into my next paycheck’s budget, or the one after that, depending on the price. I don’t generally do this with all my purchases, but if it’s a big ticket purchase (anything over $30) then it’s worth budgeting for.

Dental Cleanings

Some people might regard dental cleanings as an obvious “must,” but as someone who did not have insurance for a while and couldn’t really afford a visit to the dentist, dental cleanings were more of a luxury. I am fortunate enough to have insurance at this point, the problem is that my teeth are very weak and all the time I didn’t get cleanings did me no favors. In fact, my dentist recommends I get dental cleanings every 3 months instead of every 6 months. Because this is a top priority for me, I make sure I budget for the 2 extra cleanings that I need to pay for out of pocket. The key here is planning ahead. Once I book my next cleaning, I know it will be an extra $60 out of pocket, so I can can either save up for it in the three months leading up.

Like Christmas or vacation or any other big expense, the best way to incorporate self-care into your budget is to plan for it. In my (limited) experience, impulse shopping, poor planning, and throwing your money into things you aren’t committed to, can be your downfall. When your budgeting, sticking to just the essentials is the goal. Start by considering self-care an essential, then prioritize your top self-care needs and incorporate those into your budget.

Stay Silly- Stay Sane: Life isn’t just about material gains.

I thought it was just me until I saw this post on Instagram.

Lately, I’ve been feeling like it’s “all about the money” and I know that in this #debtfreejourney it is, in a sense, yet, I wholeheartedly believe it shouldn’t be.

Just because you want to build wealth, save for a major purchase, or eliminate debt, doesn’t mean you lose sight of everything else in your life.

It’s about balance right?

When I was younger, I used to love reading and as I got older, I substituted reading for going out with friends, movies, and other expensive habits. Once I began my #debtfree journey, I picked up reading again, because (surprise!) it’s free. It’s something that I thoroughly enjoy and it’s absolutely free; you can go to your local library and get practically any book you want in any format you want for free!

Another hobby that I love is writing…this is also free. And it’s creative and engaging and thought provoking…

But what about the not- so- free hobbies that we love?

In the comments section of that Instagram post, I saw a girl saying, “millenials haven’t lost hobbies, we’re just broke.” But oh dear stuff.sam.makes, those are just excuses. As Robert Kiyosaki explains in his prolific book, Rich Dad, Poor Dad, it’s all about perspective. The Poor Dad is dismissive and defeated, “oh it’s too expensive, I can’t afford it,” while the Rich Dad is determined and optimistic, “It’s expensive, how can I afford it?”

It’s all about perspective and intentionality. If there is something you truly enjoy doing, not only do you have to figure out how you can get it done, but also be intentional about getting it done.

Prime example; I really enjoy yoga. Yoga, as you may know, is a pretty expensive hobby (around $120 for monthly yoga membership in the DC area), but I make it work. First, I don’t have a monthly membership, instead, I buy class pass bundles and also supplement with doing yoga at home following some of my favorite YouTube yogis.

The Bottom Line

Finding ways to do things you love (and keep you grounded) is really important. We live in a world that has increasing choices to accommodate all budgets. Do you love to swim? Find yourself a public pool, or join a gym. Want to learn how to paint? Search for free classes at art museums or the library. Enjoy political debates? Join a politically focused meet-up group. Whatever it is that you like to do, find a way to do it, life’s not just about making money and paying down debt.

Growing Wealth, Risking Health-Why money can’t buy happiness.

I’ve recently started a #debtfree journey, where I’ve mapped out how I will pay off my debt (aka student loans) and become financially free. Related to this, Chapter 5 of the Happiness Hypothesis by Jonathan Haidt, is appropriately titled, The Pursuit of Happiness, wherein, he discusses our often misguided pursuits of wealth, fame, recognition, etc.


People who report the greatest interest in obtaining money, fame, or beauty, are consistently found to be less happy, and even less healthy, than those who pursue less materialistic goals.

Dr. Haidt, Happiness Hypothesis

Further in the chapter, he explains how Western culture, and particularly American culture, strives to achieve status and perceived happiness, more than we actually strive for happiness. According to the book, this is why we (Americans), would rather take less vacations and make more money, instead of taking more vacations, make less and, subsequently being happier. Essentially, it’s always been about Keeping Up With the Jones (or the Kardashians??), it’s about one upping your competition and gaining power and influence.

I think we can all agree wanting to be powerful and influential isn’t a bad thing, in and of itself. The problem is that power and influence are mistaken for happiness. We think that when we are rich, or when we are famous, or when we rise in social status, we will be happier, yet, this is almost never the case.

Should we all renounce our materialistic ambitions?

It’s important to note, while money does not buy happiness, necessarily, it does offer piece of mind. Dr. Haidt mentions this briefly as he notes, “once basic needs are met, money simply cannot buy additional happiness.” The way I understood, “basic needs,” is a state where you have enough money to cover your bills and your rent or mortgage, have food on the table and, money left over for other basic needs (i.e gas, clothes, diapers, etc). What does that mean for someone living paycheck to paycheck? Or someone struggling to save, or someone like me whose “basic needs” are met but also lives with crippling debt?

I do agree with the general idea “money can’t buy happiness,” however, we need to revise the notion that “once basic needs are met” we will not gain anything from having a few extra coins in our pockets. Using myself as an example, I have a middle class income; I live alone; I follow all the “best practice” advice on how much I should spend on rent, groceries, etc, I have plenty of “spending” money, and yet, I have crippling debt. Yes, all my basic needs are met but I live with consent anxiety over my never ceasing student loan debt.

Once we’ve reached financial freedom, money simply cannot buy additional happiness.

This brings us to the idea of financial freedom. Being financially free is a state of living where you are not tied down, anxious, stressed, or worried about your financial status. In todays world, where things like credit card debt and student debt has had a negative psychological effect on so many people, it is safe to say that meeting our “basic needs” is no longer enough.

Instead, we need to be proactively educating ourselves on financial literacy, and how we can control money so that it does not control us. To Dr. Haidt’s original point, this is not about Keeping Up with the Jonese, this is about an internal practice that will improve our daily lives, offer peace of mind and, reduce stress and anxiety—all which can lead to a happier life.

Final Thoughts

There is nothing wrong with wanting to improve your financial situation, especially if it is the cause of stress and anxiety in your life. The key is to have intentionality; what is your true motive for building wealth? Is it to become financially free? To save for the future? Note these are all “behind the scenes” goals— no one will know how much money you have saved or that you are debt free just by looking at you. In turn, if you want to build wealth to buy fancy things, or to show it off to your friends, then you are in it for the wrong reasons. Yes the wealth may bring you influence and power, but the pursuit of wealth, will not lead to happiness. It may very well lead to unhappiness. This is something we should fully understand and accept as true before making sacrifices to build wealth.


This post is part of the Happiness Series. View more posts from this series.

Check out Dr. Haidt’s book site: Thehappinesshypothesis.com

Saving Habits 101

30 Day Writing Challenge

Yesterday I went out with a friend and we were having a conversation about money. She kept referring to herself as cheap and I kept correcting her and saying she was frugal, not cheap. It is easy to conflate the two but they are not one in the same. While being cheap can be a hinderance on your wellbeing and of those around you, being frugal is a lifestyle that can help you declutter your physical and mental spaces.

In a nutshell, to be cheap is to only care about the bottom line, regardless of other factors, such as quality, or it’s effects on your lifestyle, the people around you etc. To be frugal is to be mindful of your spending habits and to spend on things that are truly important to you, rather than getting a good deal. Check out the chart below, originally appearing on businessinsider.com for a deeper look into the differences.

Admittedly, there was a point in my life where I would have considered myself cheap. It was a combination of not having sufficient funds and not knowing any better. These days, I like to think of myself as frugal— spending more for quality items and limiting spending on unnecessary items.

Frugality is about more than just spending less or saving more. For one, its a lifestyle tide to mindfulness. I’d rather cook a healthy, well thought out meal than order fast, unhealthy take out. It is also about the idea that quality is better than quantity. I’d rather have 5 pairs of high quality (perhaps expensive) shoes than 100 pairs of cheap, fast-fashion shoes.

Choosing to live a frugal lifestyle is making the decision to be selective with your money, time, and indulgences. These days, I find myself buying less junk, spending less time with people I don’t value, and feeling overall happy with my spending habits. Here are some things I’ve changed overtime:

  1. Using my Credit cards to Socialize
    • FOMO (the fear of missing out) was a major source of anxiety in my life, so much so, that I never said no to invitations. It originally steamed from being the “new girl” in town and wanting to make friends. Then it was because I wanted to maintain my friends. Now that I’ve lived here for 5 years, and have a solid group of friends, I have more or less recovered from FOMO. But more importantly, I’ve learned that you should never be ashamed to say, “Thanks for the invite but I’m budgeting or I’m low on cash right now.” The other thing that changed is my mantra. Where I used to think, “Eh life is short, live it up,” now I think, “I am going to live til I’m 105 years old and have plenty of time to ‘live it up’ once I become financially free.”
  2. Impulse Shopping
    • This one is a killer. We live in a society built on consumerism, capitalism, instant gratification, and the idea that more is more. But in reality, less has always been more. One trick I mention in my post, How to Save like an Impulse Shopper, is to delay gratification. Delayed gratification is the concept of waiting to obtain something you want for something potentially better. In this case, if you see something in a store that you want to buy, instead of buying it immediately, you would leave it, wait a few days, then purchase it, perhaps when you have more cash or when you find the same thing you wanted in a different store for a better price. Postivepsychology.com article, Delayed Gratification: Learning to Pass the Marshmallow Test, gives a full breakdown of this phenomenon.
  3. Using my Credit cards to Travel
    • Again, this bad habit was a result of my “Eh life is short,” mantra. Now that I can visualize the longevity of my fruitful, financially free life, I am more conscious of limiting my debt. Even more enticing is the amazing feeling you get from cash flowing* a vacation and coming home owing nothing to the credit card companies (I’ve cash flowed about 3 trips, and counting)!
  4. Buying Cheap/low Quality
    • Quality will always beat quantity. I learned this lesson when I bought my first real expensive winter jacket. I had been gifted a high quality winter jacket by a family I worked for when I was in college. That jacket lasted me several years and was still in pretty good condition when I donated it. I was worried about buying a new jacket of lesser quality so I threw down $250 dollars to by a quality winter jacket that would replace that one. It was the best purchase I’ve ever made! My new (2 year’s old) winter jacket is in mint condition and it keeps me so warm. I could have spend half that amount and gotten an okay jacket, but then I’d likely have to buy a replacement twice as fast and it wouldn’t have kept me half as warm!

The Bottom Line

Once you start taking control of your money and your spending habits, you will begin to free yourself from social pressures to spend, careless or unnecessary debt from more “stuff,” and, most importantly, you will free yourself from money (or lack there of) controlling you.

*To cash flow something is to pay for it with money you’ve earned and have in your possession, either in your banking accounts or in actual cash.

Saving Habits 101

30 Day Writing Challenge

More countries around the world are embracing the concept of borrowing money, especially as national economies become intertwined with one another. For example, it used to be well off families sent their children abroad to get degrees, but now you do not need to have the money upfront because there are international private loan companies that will loan you the money to go to university in a different country.

I can only imagine how many doors this has opened for modest families from countries such as India or China* who dream of sending their children to better universities in the US, as an example. This has even opened doors for American students who want to pursue degrees in more affordable countries, such as the UK or Canada but do not have the money up front.

While loans and loan programs have closed gaps in education, the housing market and other big ticket items worldwide, “borrower’s culture” is causing us to lose all sense of how much money we actually have. As a result, we are constantly spending money we don’t have.

The Financing Brand found an interesting study by Filene on borrower types. The study is geared toward credit unions and offers meaningful insights on the mindset and decision making process of borrowers. According to the study, Convenience is king.

Convenience is king. Consumers will choose the path of least resistance when obtaining loans, even if the deal isn’t as good. For instance, a desire for instant gratification explains why people will jump on dealer financing when buying a new car. It’s critical to make the lending process easy and streamlined.

-The Culture of Borrowing and Debt by Filene

Essentially, this is telling us that people like to borrow money when it is convenient and offers instant gratification. Why wait till payday when you can buy those nice shoes today with your credit card?

Convenience Cash is King

If you want financial freedom, the first thing you have to do is kill the mindset of Convenience is King. That is what credit card companies and loan companies sell to you so that you borrow more. To achieve financial freedom, on the other hand, you have to engrave into your mind that Cash is King.

Cash is King* is a way of life. It is the principle that you do not live above your means and you do not spend money you don’t already have. If you live by this principle, you will save yourself from the constant cycle of buying on credit, paying it slowing, accumulating debt, buying on credit, paying it slowing, accumulating debt. Consider this scenario— it’s Thursday and Sara and Caroline both are broke but they get paid tomorrow. The women have differing financial habits;

Convenience Is King

After work, Sara goes to Happy Hour with friends, she doesn’t have any cash so she buys a drink with her credit card for $12.

Afterwards, Sara goes to the mall and sees some curtains on sale for $49.99, since it’s such a good deal, she buys them with her credit card.

When Sara gets home she sees she has uncooked chicken in the fridge and decides she’s too tired to cook so orders in using her credit card ($30).

Cash Is King

Caroline is invited to Happy Hour but declines because she doesn’t have any money and suggests they go to brunch this weekend.

Instead, Caroline walks around the mall and sees some curtains on sale for $49.99. She doesn’t have any money so decides to come back on Saturday after payday.

When Caroline gets home, she finds some uncooked chicken in the fridge and throws it in the oven to make with some rice.

At the end of the day, Sara racks up close to $100 in credit card charges for things she didn’t really need or could have waited to purchase. The next day she can either pay the full $100 balance that she spend the day before, or she can pay the minimum due and risk accumulating interest, either way, she is out of $100 or more.

Meanwhile, Caroline didn’t spend any money, she got paid on Friday and decide she didn’t really need curtains (because the lure of instant gratification was gone) and was able to pay cash for brunch with her friends on Sunday. In the end, she didn’t owe anything on her credit cards.

The Bottom Line

The moral of the story is pretty clear cut, yet, in the world we live in, it is easier said than done. Changing one or two habits can make a world of difference. 1. If you don’t have the cash, don’t spend it. HARD STOP. 2. Only borrow if it is a true necessity and if you can comfortable pay it back without straining your budget. To the latter point, the Filene study also outlined several different borrower types. I think the best type by far is the Balanced—those who do not borrow often and never more than they can afford, but if they do borrow, it is for good reason.

*China and India send the largest amount of international students to the US.

*For the purposed of this post, cash refers to paper money and money in your checking account.