When we think about consumption and resources, we naturally think about money. As I mentioned before, that’s not the whole story, but is certainly a major part of it – so that’s where we will start.
The first step in managing your financial resources is to stop wasteful spending, regardless of whether you can afford it financially. A cottage industry has emerged to help people “tidy” their homes, getting rid of things that don’t bring them joy. Getting rid of possessions that you don’t need is a great idea (more on this in a bit). But the root of the problem is the wasteful spending on products and services that don’t add enough value to our lives, especially relative to the trade-off required to earn the money in the first place. Betty, now in her mid-60s, works in Customer Service for the city government of Portland, Oregon:
“…if you’re going to work really hard for your money, how much of that life energy are you going to spend on stuff? And so I didn’t want to do that. … I used to get really expensive haircuts, and that was three hours of my work. And I went “no I don’t want to do that anymore.” So I’ve always kind of compared how do I want to spend my time.
Getting rid of wasteful spending also means that you’ll have more money for saving and investing; and if you are already in a very strong financial position, why not shift spending that doesn’t add much value to supporting causes and charities that you care about? Beyond living your values, giving to others feels great; and there’s nothing wrong with that. Reducing your spending by just 5% may not affect your quality of life much, but could make an enormous difference when spent on others.
So, what is wasteful spending? Go back to your snapshot budget and simply work through each major category of expense, and spend some time with the details. What is really adding value to your life, and what could go? Could you get rid of some online media subscriptions? Do you really need to upgrade your phone as often as the phone companies and service providers want you to? According to an analysis in the New York Times, buying a $1,000 phone can be equivalent to giving up $17,000 in retirement savings. The math is similar for new cars and other physical products. Extending the use of things that you already own is one of the best ways to avoid wasteful spending. And that, in turn, depends on fully appreciating the things we already own. Tom, a retired teacher in his 60s, describes one of his most valuable possessions:
“There are things that are really valuable to me, like my guitar is really valuable to me. And I take very good care of it. I’ve had it for over twenty years, and I bought it used. It doesn’t look like new because it’s going to get little dings and scratches. But if anything happened to it, I would just be devastated. And not that it’s terribly valuable; it’s just really valuable to me.”
We’ve gotten too used to new and better and neglect the value and virtue of simply taking care and, when needed, repairing the things we already have. And it’s not just the big purchases that matter. Jenn is in her mid-40s and self-employed:
“…and I think also I do a lot of reading of frugal stuff, blogs and things like that. So I try to look at the big picture. And those kind of blogs…. keep you sort of on the track with realizing that the little dollars are what make the big dollars. All of the dollars add up. So if you’re spending one dollar here and one dollar there, you never get a pile of dollars. So it’s important that all of your dollars have a job, and they’re doing their job. And their job isn’t to buy shiny baubles. It’s to put in your 401K.”
Next, consider the possible benefits of downshifting your lifestyle. Downshifting sounds like a loss, but it doesn’t have to be. A lower-cost lifestyle could improve your financial situation and lower your stress at the same time.
(Betty) “The way we choose to kind of watch our resources…allows me to work part time, which is lovely. Because when I work extra time, not only do I get crabby because I’m feeling stressed. But like I like to cook our food from scratch. Mostly from scratch. Because that, one, saves us money. Because I’m cooking it instead of buying prepared. But it also is really good for our health because we’re both sixty-six. And I don’t take any medication, and he takes some blood pressure medication. So it’s trying to be a little—for me I think it’s also about being less influenced by consumer culture. I don’t really want to be on that treadmill where it’s just like people flashing ads at me and stuff.”
We’ve bought into the idea that more is necessarily better, but is it always? Or even usually? The average house size in the US has doubled since the 1950s, to 2,349 square feet. Bigger homes cost more up-front, require more furniture, and set you up for bigger annual utility and maintenance bills. We also own twice as many cars per person, eat out twice as often and spend on all sorts of devices and services that didn’t exist a generation ago. At the same time, according to the American Psychological Association, our reported level of happiness hasn’t moved a bit. Not only are measures of subjective well-being flat in the US, rates of anxiety and depression have increased (and that was pre-Covid). And though there are many reasons for this, our consumerist culture is part of the problem. Concerns about our consumerist culture are not new. The term “conspicuous consumption” comes from Thorstein Veblen’s 1899 book, The Theory of the Leisure Class in which he describes the lives of people focused on getting more and, presumably, better things. While downshifting was conceived as a response to consumerist culture, the idea of simpler living is not new at all. It’s an ideal the precedes industrialized times and is embedded in religions of the West and philosophies of the East as a way to focus more on things that matter, like humility, grace, and compassion. Downshifting essentially reframes simple living in a modern context in which consumption has, in aggregate, spiraled out of control.
The issue isn’t just a personal issue. All of that consumption takes resources: materials, energy, water, and land. According to the Global Footprint Network, if everyone on earth consumed as much as Americans (and we are not the worst offenders) we would need five earths of resources. And while most global citizens consume at a much lower rate, that is changing quickly. Economies around the world are “developing” and, according, to the Brookings Institute, about 160 million consumers are added each year to the global middle class. And, they are adopting our unsustainable consumption habits. Big changes to our global production system are happening right now to help respond to this (such as a shift to a Circular Economy), but little will change if we don’t individually reconsider what we consume, and – even more so – how much we consume.
On the other hand, these figures represent averages and country-level data. Your own situation might be quite different and I am not advocating that we all retreat to tiny homes and live off the grid (which has its virtues, but not something I am going to do anytime soon). So, if instead, you believe that you are using your financial resources wisely yet you need more, then maybe a lifestyle shift for you means upgrading your job or career so that you have more money to support your lifestyle, pay off debt, or simply to save more. In that case, you might want to explore a professional change now or invest in training or a degree that may put you in a better situation in the future. Again, there is no single “wise lifestyle” for everyone; we each need to consider our situations and make decisions that we believe are in our best interest and that align with our values.
However, as you reflect on the desire for more money, make sure you are also thinking about how that pursuit will affect your resources of time and energy.
The relationship between time and energy is a fascinating one. If you search for these two terms together on the internet, you’re probably going to find some links to Einstein’s Special Theory of Relativity. I have an engineering degree and still don’t entirely follow his theory. What I do understand, and I think part of what Einstein was saying, is that our sense of time is relative to our frame of reference. Back on earth, what matters to most of us is how much time we feel we have for the things that are important to us, and the quality of that time. Our perception of time depends on what we are doing. You can have lots of free time and feel bored, anxious, and tired, or little free time yet feel energized doing things that you enjoy while feeling a real purpose in life. An hour in line at the DMV can feel like a day; an hour of sports or with friends can go by seemingly in an instant. Having enough time is critical. Many of us are chronically unrested and stressed by the lists of things we need to do. Yet many of us, at least in moments, have time but don’t spend it wisely. So, how you spend your free time is as important. And, the things that we buy and use affect all the above. Maybe a new boat will bring you and your family happy memories, but also factor in the work involved in maintaining it and be realistic about how often you will actually use it. The same goes for all of the products that fill our homes, attics, basements, and garages. Back to the idea of living simply, Iwona, originally from Poland, is a fitness trainer in her 30s who described working with her husband to simplify their lives by getting rid of things they didn’t really need:
“And after a while you get rid of the stuff, you feel free. Just like we really didn’t need that stuff. You start realizing minimalizing all that stuff frees up all your time. You don’t have to clean. You don’t have to wash so much. You don’t have to dust all that stuff. You need less space. You don’t need to pay for it. That’s pretty much what gives you more freedom and that’s what you feel.”
For wise consumers, spending and the material world are simply a means to an end. The goal is not to focus on amassing wealth so that someday you can be happy. Yes, you need substantial savings to retire, but you should pause if you’re not enjoying your life now.
At the same time, there are many products and services that bring us great joy or make life measurably better in some way (something we’ll address in more detail with the Purpose dimension). In short, wise consumers spend differently, and intentionally “budget shift” away from things that don’t justify the cost (bigger house, newer car) towards things that do (things that promote our health, personal growth, and that bring us closer to other people and places). Spending differently can also be about buying time. If they can afford it, some wise consumers report spending on things that many of us would consider a luxury, and potentially even wasteful. But, if you are money-rich yet time-poor, it might make sense to outsource some things at times, like house cleaning, home maintenance, and lawn service. While many wiser consumers are relatively frugal and wouldn’t even consider any of these (better to have a smaller home and no lawn to mow), others find that these services, and some products, make life simpler and easier – and give them more time to do the things they want with the people they want to spend time with.
Finally, though, another option for buying more time is to change your work. Beyond the lifestyle downshifting mentioned earlier, another change that wise consumers often report is downshifting their work. Sometimes this simply means choosing to spend less time working at your current job, or retiring early from a fast-paced career to a lower-stress job that buys you more time. If you are still in the earlier stages of your work life, however, it may mean considering a career change – something that many of the wise consumers I interviewed did at some point. Such a big change is not easy, especially in a culture that de-values leisure time and prioritizes financial wealth. We honor billionaires and question the work ethic and sensibility of others who, relatively at least, de-emphasize the place of work in their lives. Yet, the pursuit of free time has its logical limits, too. The so-called FIRE movement (“financially independent, retire early”) promotes the idea of working in a high-paying job through your 20s and into your 30s and saving 50-70% of your income so that you can retire very young. While this sounds appealing at some level, it presumes that we should just suck it up and deal with a job or lifestyle that we don’t enjoy so that we might be free someday to do all of the other things we wish we could do now. Why not instead find a career that doesn’t make you feel a pressing need to retire? Again, it’s all about balance, over time, guided by what makes sense for you and your family given your priorities and values.