Have you ever had the courage to contact a stranger on social media? In January 2018 a post from Underspent author, Rachel Smith, showed up in my Linkedin feed. Rachel has merged her talents, hobbies and passions across different areas: she is an advocate for cyclists advising internationally on transport planning and infrastructure, she is passionate about the environment, minimalism and reducing waste, where I most admired Rachel centred around a large challenge that she set for herself in 2014 where she bought nothing new or second hand for over a year. This helped her to save 38% of her salary, $52,680. I plucked up the courage and sent Rachel a private message on Linkedin and we ended up arranging to meet for lunch. I have since read Rachel’s book, Underspent, which details her year of giving up shopping in 2014. This article provides an overview of three lessons I learnt from Rachel to apply to my personal finance journey: making new rules, getting organised and rewarding yourself with experiences.
1. Underspent tip – Make new rules to address the paradox of choice
The paradox of choice refers to that feeling when there are so many choices it makes it awfully difficult to make a decision. As a millennial I have been lucky enough to have many choices throughout my 30 years on the planet: there is practically every and any job out there possible, with a fancy title attached, in terms of any consumer product I would like to buy – milk, nail polish, t shirts, sheets… there are so many choices. As a side point though,
How good is it when you go into a restaurant with a small menu or when a friend recommends a meal to you and you do not have to spend time pondering the menu and wondering if the dish really does match the carefully curated adjectives….
Set up some rules to govern your behaviour because the fewer decisions you make and the fewer decisions you have to make the easier it gets. US president Barack Obama did this with his blue suit work combination and Art Director, Matilda Kahl did just exactly the same thing with her work uniform and our very own Australian television presenter, Karl Stefanovic, did this with his work suit although as more of a wider argument in relation to gender inequity when it comes to clothing.
“You’ll see I wear only gray or blue suits,” Obama said in his 2012 Vanity Fair interview with Michael Lewis.
“I’m trying to pare down decisions. I don’t want to make decisions about what I’m eating or wearing. Because I have too many other decisions to make.”
Rachel’s rules she put forward to help combat the shops include:
- Chose your own personal shopping playlist – limit your grocery time by shopping with headphones as the music in the shops has been carefully curated by psychologists to slow you down, make you feel relaxed and spend more money
- “She’s making a list… and checking it twice” – put items you would like to buy on a three month waiting list before purchasing them, you might want to join her for this on her March Money Miracles challenge
- Getting brave and asking your neighbours or community for items you need. When you think more deeply about it, it is rather unusual that most households on your street each own a lawn mower they use once every few weeks. Imagine if you and a neighbour or two decided to share your gardening tools?
A few of my personal rules I have applied to my day to day life include:
- If it’s a working weekday I always have a smoothie for breakfast. I don’t make breakfast or morning times stressful and instead prepare all smoothies on a Sunday and really enjoy the minutes at home before you leave the home for work scanning Instagram, listening to podcasts, between sips of coffee and smoothie.
- Unless drinking or having plans after work I always cycle to work. Once I decided to start cycling to work I enjoyed it so much more than relying on the bus and sitting in traffic for up to an hour in the morning. What I especially like about cycling to work is my ability to go and leave on my own time and the quick speed that it takes to get into work 20-30 minutes.
- I never purchase lunch when eating alone, only purchase lunch when specifically planning to meet someone and networking or doing something fun
- I always save $750 towards my house deposit each payday, never dip into this account. This has recently been revised up to $818 to achieve my goal of having my $60,000 house deposit by the end of 2018.
2. Underspent tip – Get organised
Realistically how many tubes of toothpaste, bottles of shampoo, books, pairs of knickers or work clothes do you have?
Upon auditing her home and sorting through each room carefully Rachel had some realisations. She realised just how many hotel soaps, 84 bars to be exact, she had collected over time. She realised what clothes she had and actually liked and wore. She realised just how many items she had in her kitchen. She realised just how many USB sticks she had from conferences. So what can you do?
Audit what you have in your home:
- Use up what you have in terms of toiletries
- Repair clothes you love
- Give away excess clothing that are too large or small for your body
- Give away excess items such as books, kitchen items and jewellery excess to your needs. Something I really admired that Rachel did was give away 20 USB sticks to homeless people so they could keep their important personal documents with them
3. Underspent tip – Reward yourself with experiences
My Aunt quit her full time teaching job a few years back to train as a massage therapist. She reflected that before her quit her job, although her teaching role paid her more money, she often felt drained and sad at the end of the week. She would buy herself clothes and other items to fill in her feelings. She said she came to the realisation that beautiful clothes and nice lunches were not worth how she was feeling for the majority of her time and instead she was going to choose life and her happiness.
Over her year of not spending Rachel allowed herself to have experiences instead of purchasing consumer items. Whether it was participating in one of her favourite sports, horseriding, going to a movie or investing in a pottery class.
Forbes reporter, Blake Morgan, notes that 78% of millennials are already engaged within this concept with 78% of millennials stating would choose to spend money on an experience or event over buying something desirable. Happiness expert, Gretchen Rubin, also explored this concept in the July chapter of her book Money: Buy some happiness, of her book, the Happiness Project.
How can you begin to take a closer look at your everyday life to save money:
- Reduce choices and set up new rules
- Get organised: shop in your own home and give away excess items that are not required
- Invest in experiences as opposed to consumer items
Want to know more about Rachel?
- Underspent book: Rachel’s book is for sale online or in Dymocks bookshop
- Website: Rachel publishes an article a week on her website and has a library of content to inspire you across personal finance and transport
- TEDX: I’ve included a video of one of Rachel’s TED talks below
Women in Wealth
I’ve been searching and speaking to women that have successfully purchased property and achieved things on their own to help inspire my journey as a single female working to purchase my first home on my own. If you are a woman that is succeeding in the area of personal finance or you know of a woman with some insights to share please get in touch.
The Economiss is a single, female, millennial on a mission to buy her first home in Australia. A Kiwi by birth, she jumped over the ditch after she finished her tertiary qualifications in search of employment. The narratives quite often showing up online overshadowed her thoughts of buying a house alone changed in 2017 The Economiss started super charging her finances and saved over 30% of her after tax income towards her house deposit as well as cash flowing four overseas trips. In 2018 The Economiss decided to create a new narrative and share her journey saving 36% of her after tax income for a $60,000 house deposit by December 2018. Do you have some tips to share or want to be featured on the blog, please get in touch!