Spending less to invest more
I’m giving a talk at The Riveter called “Women & Money” tomorrow. I’m totally thrilled. I had a hard time deciding what to cover as the topic is so broad, but after soliciting feedback from The Riveter community, I decided to focus on spending and investing. The truth is that every single person I asked wanted to learn more about investing. So many of us have goals to invest more, or feel like we should be investing more, but feel like we can’t afford to. But one thing about investing that is often glossed over, but I like to focus on, is this (and I quote myself, giggle):
“The less sexy side of investing more is spending less”
So often when I talk to people about investing they say things like, “if I just made more money, I would invest more”. And if you are struggling to pay your bills and feed yourself, yes, I agree this is true. But for the rest of us, the other side of the equation that we like to ignore is just how much we are spending on other stuff that inhibits our ability to invest more. Things like paying $200 a month for parking instead of parking 5 minutes away and walking, or paying $20 a month on subscription fees for apps we don’t use. The real beauty of deciding to make a change to spend less is that it isn’t a one time win. If you change a habit like paying for parking, that will save you money this and every month in the future. At least until you change the habit. Additionally, if you invest the money you would have spent on parking, it compounds on itself.
So my challenge to you today is this, spend five minutes brainstorming on what your priorities are in life. Write them all down on a piece of paper. If you want an example, mine would focus around on health, freedom, and contentment. Then look at your spending the last month and pick one thing that is not in line with those values and priorities, and eliminate it. Bonus points if you increase your current monthly investments by that much. That will really seal the deal.
In the parking example above, not only does parking 5 minutes away and walking save me $200 dollars a month, it also adds 10 minutes of walking to my day which is in line with my priority of maintaining my health. Win-win.
Now more than ever, because I am financially independent and relying on my investments for income, I am constantly looking for clever ways to reduce my expenses. In the last year I sold my car and moved to a smaller place. I also do small things like suggest meeting friends for coffee or happy hour instead of dinner or drinks. It all adds up.
Below is a snapshot from Mint.com of my spending over the last 6 months.
