Layoff Lesson 2 – Instant Regrets and Mindless Spending

My recent financial history flashed before my eyes after I hung up with HR. I thought of the last two weeks of spending and instantly cursed our recent expenditures. The night before the layoff we had spent $64 to eat out for a family of five. We had just subscribed to Pandora even though we rarely listened to Pandora. The list went on with endless Sonic runs after school, visits to the local farmer’s market, etc.

The problem with the purchases that flashed through my brain like little needles was that they failed to bring any significant amount of joy to our family. I was not upset about spending money. I was upset that we had spent so much money that could not create a lasting positive memory. It had not lifted the spirits of someone who was down. It had not been used to minister to a friend. It was just mindless spending.

Dwell on that for a second. Without a job or a source of income to cover our mortgage our family is not implementing draconian measures. We continue to run the air conditioner when it gets hot. We continue to water the flowers in the flower garden (we are not watering the lawn). We have had friends come over for dinner.

We have simply reinstituted spending rules that we have let slide over the past few months or years. Eat at home as a family. Avoid running through a local fast-food drive thru after school. Make a list before going to the grocery store.

What amazes me every time we go through this exercise is that we waste a lot of money when we fail to be a little disciplined and intentional. I am also amazed that reducing our spend does not require significant sacrifices. and it often leads to healthier choices.

Regardless if your annual income is $50 or $50,000 or $500,000, put together a budget and then track your spending to that budget. Take time out of each weekend to assess your spending with your partner. Here are some tips that have helped our families do this successfully:

1. Be sure the budget is reasonable and comfortable. We started just by tracking our weekly expenses, analyzed them, and then established a budget based on that analysis. Another trick for success is to build in discretionary spending for each member of the household. This should cover eating out while at work and other incidentals. Our first week of assessing our spending revealed we were spending $30 per week on soft drinks. Horrible for our kids and our budget.
2. Pay yourself first. Move money into savings every time you get paid, even if it is just a couple of bucks. It can feel like two steps forward and three steps back sometimes when you find you need to buy new tires but building the discipline of saving is important to financial independence.
3. Cut costs that benefit you. Ordering a soft drink, a beer, or a cocktail at a restaurant is expensive and these are full of empty calories and/or chemicals. Consider water which is free and zero calories. If you want drinks that you have to pay money for, buy them at the store and drink them at home for much cheaper.
4. Be intentional. If it does not bring joy, do not spend it.
5. Make it an adventure. Set goals and then celebrate your wins. Once you hit a savings goal, celebrate as a family with rewards in line with your goals. Saved $50? Bake a cake as a family. Saved $50,000? Go on a reasonable family vacation.
6. Make budget review a ritual. Finding any time ever to review finances with my wife is like pulling teeth. We struggle between kids and schedules and work and sleep and the fact that it is a budget review. Schedule time after kids are asleep, pour a glass of wine, and review. Take the time to discuss the upcoming week and synch schedules. Most importantly, check to ensure that you are on track with your family goals; financial and otherwise.