Cleaning Out Your Financial Closet

April 11, 2017

Seeing as it’s officially springtime, Americans everywhere are beginning the process of cleaning out their closets (cue Eminem), fridges, and basements. The annual spring cleaning ritual is designed to help us evaluate our belongings and ask ourselves if they still fit in our lives. Just like man buns (THANK GOD), we may find that we’ve outgrown some of our financial beliefs and behaviors—making spring cleaning season as good a time as any to reassess that area as well. Also, let’s get real: there are some pretty bad smells lurking in our freezers that we’ve allowed ourselves to become nose-blind to in the name of self-preservation.

Many of us are inspired to do a monetary deep clean once we brave a closer look at our spending patterns and credit card balances. As a result, we promise to cut out the morning lattes, nix the movie theaters, and bring our lunch every day. But, with cleaning out our finances, just as with cleaning out our homes, it can be awfully easy to dirty things up again—and much faster than we want to admit. If changes are taken begrudgingly and you’re counting down the days until you can spend freely again, permanent change will be an uphill battle.

The key, therefore, is to ask yourself the following questions as you move through the process (and don’t be afraid to step outside of your comfort zone when you do so):

Have my beliefs around money changed?

As kids, we thought our parents were perfect. As far as we were concerned, they could do no wrong. We'd watch the parentals spend money, time, and energy, and never question any of it. Whatever they did, it had to be right...right? Hindsight is 20/20 though, and we know now that our parents probably definitely made mistakes, but were just trying to do the best they could.

Case in point: Growing up, Friday night was restaurant night in one teammember's household. Chili’s, Red Robin, or, if you lived in Colorado during the ‘90s and want a truly nostalgic throwback, Round the Corner, was ON as soon as Mom and Dad got home from work. For many of us, a similar tradition continues today—especially after a particularly tough day or week at work. However, with credit cards, student loans, and other debt weighing us down, does a tradition like that really make sense? Questioning even subconsciously-held beliefs like these is an important part of any financial spring cleaning effort.

Time is money

Sometimes, all it takes to get our spending under control is a change in perception. One suggestion is to think of money as effort or time instead of a dollar amount. How much will brunch at that popular place with bottomless mimosas cost? 2.5 hours of your hourly wage. That new pair of jeans? A full day’s pay. An Epic Season Pass? An entire week’s worth. Once you begin thinking of your money in this way, spending it becomes an exercise in awareness.

To take it a step further: if you work, say, 40 hours per week, your monthly budget would be 160 hours (40 hours/week x four weeks). If you spend 55 hours on rent and 15 hours on groceries, that leaves you 105 hours for the rest of the month. How will you choose to spend those hours?

Why do I want to buy this?

If you’re driven by the need to impress others with how you dress, what you own, and where you eat, there will always be a reason to spend money. If your self-esteem has become attached to the things you buy, you might need a reality check (sorry).

First of all, nothing can improve your self-worth like giving back (and if you want to give cash, you might be able to write it off on next year’s taxes). But if you’re ready to spend less and not give up that haute couture lifestyle, you may want to learn to love thrifting. Antique stores and other second-hand shops are a gateway and treasure trove for thriftier lifestyle—one that potentially makes almost no sacrifices when it comes to being hip and trendy (and nothing is trendier right now than a good, old fashioned throwback). 

Armed with the answers to these questions, you’re well on your way to a full financial deep scrub. Now, if you could just figure out which of your countless pairs of shoes you want to donate...