Q&A is something I’m now doing weekly in this blog. Here’s a great question I received that I know other people have as well:
Inevitably, when I build up a small amount of savings, I end up using it for life’s little emergencies and cannot seem to build up a decent emergency fund. In addition, I struggle with a moderate shopping addiction. Any suggestions on addressing this destructive habit and building an emergency fund?
Let’s first talk about your emergency fund. I’d like you to ask yourself if “life’s little emergencies” are really things that you had no idea would happen, like emergency surgery, or if they are things that come up infrequently, like needing new tires.
Most people don’t think about things they buy once a year, but they’re not surprises or emergencies—people know they’re coming and they have to plan for them. True emergencies probably only happen once or twice a year, and hopefully not at all.
The bottom line is this: if you’re constantly spending your emergency fund, then you haven’t been saving enough.
Now, you’re probably asking yourself how you can save more. Well, you mentioned you have a shopping addiction. If you overcome that, you’ll probably have all the money you need. Here are a few tricks for helping you get over it.
First, every time you see something you want, don’t buy it for 3 days.
If you feel like you NEED it at that point, then maybe it’s OK to get it. But if you don’t, you’ve moved past that “high” you get from shopping.
Second, take away easy access to your credit cards.
Take your credit card(s) out of your wallet, put them in a Tupperware bowl, fill it 2/3 with water, put the lid on it, and put it in the freezer. You can’t get to your credit card easily, but it’s there if you ever have a true emergency. Without your credit card, you’re spending on a cash basis—this means if you don’t have the money in your account, you can’t buy something. When you know your choice is either to pay your rent/mortgage or buy a new shirt, you’ll be forced to make the right decision.
Third, think about WHY you’ve been buying what you’ve been buying.
If you’re looking for that high, then you need to understand more about why you’re feeling low and work on solving that issue. If you feel like you have to keep up with the Joneses, then know that you’ll never have what I suspect you really want—financial freedom, peace of mind, and enough money to retire.
I hope this has helped! Here are links to a few of my other blog posts about money to help you start shifting your mindset away from spending and toward saving.