There are four weeks until we collectively bid farewell to summer 2019 and welcome back the anticipated season: fall. For a majority of individuals, fall is the most wonderful time of the year due to all-things pumpkin, brisk weather, the change of color in foliage, fall fashion, Halloween, and Thanksgiving (should you celebrate). Thus, as individuals take stock and reflect on summer as a whole, it is my hope that financial reflections were had, too. As such, when examining bank accounts, credit card balances, loan balances, and monthly statements, it is important to highlight the successes, as well as outline amendments and changes that need to be made moving forward. Therefore, if one is looking to either boost both their checking and savings accounts, lower monthly bills and statements, and tangibly plan for a financially solid remainder of 2019, an option to explore is financial dieting.
Financial dieting allows one to thoroughly assess their current financial circumstances and then create a realistic plan to cut, or rollback, on excess spending. Thus, should overspending on dining out contribute to a rapid depletion of funds, scaling back can occur. As a reminder, because every individual, level of income, and financial need are unique, assessing where to begin scaling back, and how much to scale back overall, will be equally unique. As one begins identifying problem areas that need correction, be mindful that the goal is not deprivation, but preservation. Financial depravity is not encouraged for the mission is not to punish those who indulge in excess spending but use such behaviors as the foundation for education. Additionally, encouragement as one begins bargain shopping, canceling subscriptions, creating budgets, reading financial literature of effective saving techniques, and more is needed. Moreover, encouragement as one financially and mentally prepares for another impending recession is needed, too! According to Neil Irwin of the New York Times, while the United States is not currently in a recession, and may well avoid one in the future, the “chances that the nation will fall into recession have increased sharply in the last two weeks.” What has heightened this probability is the “unmistakable message that global investors in the bond market are sending. Longer-term interest rates have plunged since the end of July” (Irwin, 2019). Moreover, Irwin writes that the shift “historically tends to predict slower growth, interest rate cuts from the Federal Reserve, and a heightened risk that the economy slips into outright contraction.” As a lifelong student of economics, the thought of further studying these trends fascinates me. As a financial educator, such information excitedly propels me to break down the information so that is readily understandable for my audiences. However, as an individual existing under corrupt capitalism, the thought of yet another financial crisis leaves me anxious and panicked. Yes, I know that this impending recession will (hopefully) not be as huge as the 2008 Fiscal Crisis, but the thought of fiscal uncertainty for a large percentage of Americans is plaguing. For this reason, and many more unnamed, it is time to become serious about financial dieting. To be clear, financial dieting is not the be-all and end-all to solving how to survive should the recession hit. Moreover, financial dieting will not drastically move one from a lower tax bracket to a higher bracket, and it certainly will not close the gender, race, and wealth gaps, or eradicate poverty – only practical, real-world state and federal policies can help to achieve this. But, for the sake of employing tangible, positive fiscal habits, financial dieting is a start. To expand upon financial dieting and fasting further, visit financial expert Winnie Sun’s Twitter page and peruse her insightful thread from August 14th. Below you will find my thoughts on the subject. Enjoy! Q1: Only buying what you NEED mean something different to everyone. What are some good rules/guidelines to follow during a financial fast? What do you still spend money on, what no longer makes the cut, and where do you draw the line? WW: During a financial diet, it is important to remember that while saving for, and spending on, necessities is key, there should be no shame when buying items outside of your list. Therefore, spending on needs vs. wants should not result in prolonged buyer’s remorse. #WinnieSun Q2: The talk of tariffs also mean things are going to cost more, and we’ll have less to spend. What steps do you take as you prepare to cut off your unnecessary costs? How do you change your shopping and spending habits? WW: Begin shedding financial deadweight now. For example, begin examining which subscriptions can be canceled, as well as which memberships no longer bring you joy. Employing practical, fiscal techniques now will help cultivate consistent habits once the markets drastically shift. #WinnieSun Q3: Feeling frugal? What is the biggest benefit to ceasing your spending? How can going on a cold turkey spending fast help you become more conscious of your spending and break bad money habits? WW: One benefit is having options associated with income saved. For example, with the money saved, I have the option to invest in professional development opportunities tied to my 9am – 5pm or investing in items related to my 7pm – 2am (financial literacy business). #WinnieSun Q4: They don’t call it a Financial Fasting Challenge for nothing. It’s challenging if you’ve done a financial fast, what was the hardest part to you? If you haven’t what do you imagine will be the most difficult part and how can you prepare yourself for the struggles? WW: I embarked on a financial fast last year and remaining consistent proved to be difficult at times. Possessing this abundance of knowledge, and often not practicing sound fiscal habits, is complex and unearthed truths that I was not ready to confront. #WinnieSun Q5: How long do you go? What is the best amount of time to financially fast? How do you determine the best durations of time and frequency to hit the pause button on your spending? WW: I financially fasted in increments: 30 days, then 60 days. One looking to financially fast has to find the duration that best fits their circumstances, commitment, and schedule. #WinnieSun Q6: Cash or card? Do you prefer to pay for your necessities with credit cards or cash> What are the pros and cons to both? WW: Drake may not carry cash because his money is digital, but I am a tried-and-true paper in the wallet kind of gal! Additionally, I am still weary of credit (because of identity theft) and have found that I best budget when I can see and physically count my money. #WinnieSun Q7: Track your journey! When it comes to a money experiment like financial fasting, do you end up relying on a budget or do you think it becomes second nature since the budget is so bare bones? Do you track your thoughts and expenses in a journal? WW: I am a visual learner, so having a color-coded, visual budget is essential in all of my financial processes. Additionally, I cannot stress enough how beneficial it is to have a money diary to track the day’s expenses through storytelling. #WinnieSun Q8: What deters you when you’re tempted to make an unnecessary purchase? How do you remove/resist the temptation to buy things you don’t need? What tricks and tips work best in your experience? WW: Overanalyzing previous “unnecessary” purchases and overwhelming feelings of buyer’s remorse have deterred me from making unnecessary purchases in the past. As a result, I never like feeling as if I am reckless with money. Moreover, I work overtime to ensure that every dollar earned is spent wisely. #WinnieSun Q9: OK, you completed your goal of financial fasting and have saved some money. Yay! Now what? How do you ease out of your fast without finding yourself going on a full-fledged spending spree and undoing all of your hard work? WW: If saved funds are not spent on necessary items and purchases, then the funds are deposited into my savings account for safekeeping. #WinnieSun Q10: How can you get creative finding solutions to what you’re tempted to buy while on a financial fast? What “make it work” moments are you most proud of when it comes to using what you already have instead of buying something new? WW: Being creative is as unique as the individual. Therefore, shake things up as you see fit and only purchase new items if current items are completely broken or torn beyond repair. #WinnieSun Q11: Sure, food is a necessity, but that doesn’t mean you need to go crazy at the grocery store, go restaurant hopping, etc. What are the best budgeting tips to keep your spending in check when it comes to necessity items. What practices help you stretch your dollar? WW: While eating out is often convenient and fun, resolve to dine out in moderation. As such, limit eating out to once a week or twice a month. Again, you can enjoy life’s pleasures, but pleasure in excess can be (literally) costly! #WinnieSun Q12: If a full financial fast sounds too extreme for you, what baby steps or trials could you practice so you can “train” to build up to it? WW: As previously mentioned, assess memberships and subscriptions that no longer fulfill you and can be canceled. #WinnieSun Q13: What’s your motivation? What are you looking to gain by restricting your spending? What goals are you saving for? WW: First, my motivation is the satisfaction of knowing that I can “talk the talk” and subsequently put those words into action. Second, it would be comforting to know that my small actions can yield positive results as I seek to have a secure financial future. #WinnieSun
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