Moderation is a useful tool in all aspects of life. But how do we achieve financial moderation for ourselves and our families?
- A good spending ratio is 50% needs, 30% wants, and 20% savings.
I wasn’t the typical newly married woman – I was single for a few years and had a decent job. I didn’t want to overburden my parents with my expenses, so I lived very frugally. I knew real expenses were coming – tuition, mortgage… so wherever I could save, I did. If I had leftovers, I used them again (every time my husband sees me busy in the kitchen, he asks me what ingredient I’m trying to get rid of). I rarely cooked meat – the chicken is healthier anyway and the cutlets were a treat. We didn’t take a vacation. We bought a two-family house so the income would cover the mortgage. We didn’t buy presents for each other. I have to be honest, it was difficult for me. If I had to do it again, I hope I’d be smarter and realize that spending a little every now and then takes a little pressure off you, as long as it doesn’t become the norm. I liked good quality clothes, but I swallowed my pride and learned to shop at Target. The feeling of not having to answer to anyone is liberating as long as you have the motto in mind that you make smart decisions. I have learned that my value is not my comfort or outward appearances, but rather having a goal and sticking to it. This may seem extreme to some and normal to others – always set the bar a little higher than where you are. I saved over 20% and spent less than 30% on my wants, but I still have many years of savings left. I have become a much less needy person now. Just because everyone has the latest xyz doesn’t mean I need it.
- Are you looking for short-term satisfaction versus the long-term goal?
A sign of maturity is setting aside an instant reward for something more worthwhile in the long run. Practical example: young children need a cookie as a reward for their behavior, older children can expect a weekly treat. We need to behave like the adults we are – do you find yourself ordering from Amazon all the time? Try this – put whatever you want in your basket and wait a week – do you still want it?
- Are you worried that your children won’t be socially accepted if they don’t dress well or don’t have the latest toys?
They should definitely be within the normal range, but they don’t have to be the best. It’s the greatest gift you can give your children, the gift of being satisfied with less. My teenage daughter must approve of what I wear when I go to PTA, but I hope one day she won’t judge someone by their cover alone. When my teens ask me for the latest sneakers, I don’t buy them right away and hey, sometimes they’re sold out and they see they’ve survived.
- If you spend a lot on prepared foods, see how much you can save if you cook the same or better meals yourself!
Learn to cut back a bit in this area – if you eat out once a week, make it somewhere less expensive and save the high-end restaurants for special occasions.
- I don’t know what is the right approach to children and finances – do we want our children to earn money or do we prefer that they don’t worry about finances until they need it ?
If they make money, they should definitely give tzedakah, be allowed to spend part of it and save part of it.
- If you fear becoming too frugal, reduce your own needs, but be generous and kind to others.
Most importantly – never judge another person’s spending habits – what is a necessity for one may be a luxury for another. (I always had almost full-time help because I was working and couldn’t juggle everything but was saving in almost every other way.)
- Keep this motto in mind – ‘Don’t be a penny wise and a pound stupid.’
When I decide to make a big purchase, sometimes I overspend because I’m in the spending mindset, but 10% off a couple hundred dollar item of clothing is way more than 10% off the mugs I drive across town to buy.
There are interesting investments that I probably pass up sometimes because of my mentality. If you don’t trust your own judgement, ask someone unrelated to the situation who can guide you.
I can’t guarantee that any of my tips won’t make you financially rich, but it will give you peace of mind knowing you’re living within your means. Each reader can help themselves and their friends by taking small steps. Let’s learn to respect people who spend within their means rather than thinking they’re ‘nebby’.
I definitely don’t set the latest fashion trends, but I would be so happy if I could make financial prudence the latest style.
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