The Financial Diet
Towards the beginning of the year most people make resolutions having to do with diet or finances—or both. But what if you combined the two and put yourself on a financial diet? This is exactly what Ron Lieber is suggesting in his February 6 article in the New York Times.
As Lieber points out, because of the current financial crisis we are now constantly barraged with opinions about where things went wrong and financial advice telling us how to keep our own bank accounts safe. In the midst of all this sometimes confusing and conflicting advice, Lieber has turned to the food specialists for financial guidance… with surprisingly simple results!
It turns out that the 4 golden rules of healthy eating translate pretty well to healthy spending as well:
Remove Temptation: just as dieters keep sweets out of the house and out of reach, so should financial dieters remove temptation from their everyday lives. Lieber suggests taking yourself off the e-mail notification lists for your favorite stores, or canceling your account with Amazon.com. We would also suggest staying away from the mall.
Portion Control: The first step of dieting is to cut down the size of your portions; the same can be done with your budget. If you are a clothes horse and spend much of your money buying clothing, give yourself a budget. Then take that budgeted clothes money out of your bank account and put it in an envelope. When the envelope is empty the buying stops until the next pay period. This can be done with just about any budgeted item, including books, music, eating out, etc.
Count Calories: Just as counting calories makes you aware of exactly how much unnecessary eating you do, religiously keeping track of every purchase will bring a surprising awareness of your excess spending. Once you’re aware, putting a stop to it will be much easier.
Create Good Habits: They say that it takes 28 days to form a habit. If you can keep a healthy diet for 28 days it will become second nature and lead to healthier habits for a lifetime. Make a resolution to stick to your financial diet for 28 days. Having a cut-off date will make it easier to get through the rough patches in the beginning. After the deadline has passed, reassess and see how difficult it really was.
Our guess is that it will be surprisingly easy to maintain your healthy new habits!