A certain large bank received ridicule for an advertising campaign that encouraged saving over frivolous spending. Critics alleged that they were poor-shaming Americans who found their bank accounts too low. Essentially, the bank recommended making coffee at home and walking instead of taking a cab. At a time of wage stagnation and consumer price increases, Twitter users piled on. Everyone from shoe-string budget millennials to Democratic presidential hopeful, Elizabeth Warren, slammed the bank for trivializing the struggles of everyday Americans trying to make ends meet. And rightfully so.
While I agree the ad campaign was crass and thirsty, I also think we're missing the long-term solution. The bank seemed to blame people for being frivolous. The Twitter social justice warriors seemed to claim victimhood. Perhaps there is another way. Perhaps we should consider Power Spending. This is a term I just coined five minutes ago that brings together Attitude, Behavior and Community to make every dollar go a little further.
Power Spending: Attitude
- Be mindful of your spending. This means keeping track of where your money is going. Too often our monthly budget leaks money. Like a pipe in the attic dripping quietly, money is evaporating, and we can't quite put a finger on it. Last week, I took a look at my cable bill. Several months before I had subscribed to a premium channel so that I could watch sporting events that the channel no longer provided. Woops. A five-minute call to the cable company and now I'm $20 richer every month. Take on the attitude of a crime scene investigator and search diligently for leaks small and large.
- Be grateful for your spending. The food that you traditionally eat at Thanksgiving isn't that great. If it were, turkey and cranberry would be popular pizza toppings. The reason that the Thanksgiving meal is so great is because we are grateful. It's the attitude and not mom's cooking. Spending and budgeting is the same way. This is an amazing time to be alive. It's never been easier to live like a king on a commoner's budget. Or have we forgotten that only 40 years ago we had to get up off the couch to change the channel like savages? Have the attitude everyday that you have on Thanksgiving.
- Be prepared for Murphy's Law. On the other hand, I realize that not all spending is happy spending. So have the attitude of a military engineer. Back in 1949, Air Force Captain Edward Murphy said, "If anything can go wrong, it will." Capitalism is an adversarial pursuit and life happens. Have the attitude of a soldier and be prepared for the worse by saving up at least 3 months expenses in the bank.
Power Spending: Behavior
- Prioritize saving, investing and charity. Live off the rest. That's really all that budgeting is, prioritizing what you have to do over what you want to do. And while you need things like food, clothing and shelter, they are second on the list to saving, investing and charity. The reason is a financial variation of Parkinson's law, which states that a task will fill the time you give it. With budgeting, your house, food and clothes will take up the space you give it. Saving, investing and charity will not. They will quietly lay quiet on your budget spreadsheet month after month. Make them a priority and live off the rest.
- Make lists to overcome impulse buys. Whether going to the grocery store or browsing the Amazon Prime app, the retailer knows you are in a buying mood. At the grocery store, the entrance and end caps call out your name with stuff you don't really need that is half off. Many times, I've come home with my "savings." But did I really need a metric ton of toothpaste? Online retailers will let you know that other shoppers, who are much cooler than you, also bought this product and that product in addition to one that is in your online shopping cart. This mild peer pressure and the power of suggesting can help you mindlessly add it as well. Make lists and stick to the lists. It will give you pause and make you mindful.
- Wear a uniform. Coco Chanel, Karl Lagerfeld, Steve Jobs, Warren Buffet, Bill Gates, Mark Zuckerberg. All rich, famous and highly productive. They all had or have a look. They have figured out what their day to day clothing will be and they've stuck to it. This is one less decision they must make. Ironically, this makes clothing far more economical as well. Because once you figure out your look you can find the way to make your dollar do more. You can hack that look. Granted, funerals, weddings and going to beach may not work for your Warren Buffet three piece. But day to day, you can dial it in.
Power Spending: Community
- The best attitude and behavior of Power Spending is to seek out other people who want to Power Spend as well. Yesterday, at a child's birthday party, I sat down for an hour with a dad and talked about appliances, electronics and shoes. In that 45-minute conversation, I learned which brands were rip off and which were worth every penny. I had him go over a proposal that the electronics store people gave me when I went shopping for a high-end TV. Turns out they were giving me good advice at a fair price. Surround yourself with smart people who are passionate about getting the biggest bang for your buck. This can be done in person or online. And remember what Emerson said, "In my walks, every man I meet is my superior in some way, and in that I learn from him."
- Unfriend the Rats and the Joneses. You've heard the phrase, "Keeping up with the Joneses." Well the Joneses are also the Rats, as in the "rat race." You know who I am talking about. In your life, there are people that are status conscious and love to virtue signal their success. Too often this creates an arms race with each person in a community trying to outdo the other. Well, you need to stop the madness. Either cut them out of your life or let them know you won't be participating. If you can keep them as friends without falling to the temptation even better. Maybe you can be an example of Power Spending that sways them your direction. Plus, you can borrow their boat that they never use.
So, there you have it. The ABC's of Power Spending. Simple enough in concept, but it takes effort in execution. If you'd like to learn more or teach me what you know, click here.