There is a great irony out there when it comes to your spending or saving that arises around the amount of control you allocate towards something over a long period of time, the less likely you actually need to control that item. The classic example of doing this is giving yourself ‘spending cash’ (which some people call ‘fun money’) on a monthly basis.
When most people start cleaning up their spending habits it often makes sense to put all those little transactions you do each day into a pool of cash which is finite over any given month. After all, it you know you have a coffee spending habit nothing else shows you exactly what you have spent in a few weeks than an empty wallet. It forces you to think about your spending and realize what you are doing rather than just mindlessly spending money. So as a tactic, it generally works well as it is basically like training wheels for control your spending. No wonder Gail puts people on cash budgets with jars.
The irony kicks in when people do this for several years. After that point in time, the spending limits are so ingrained in their behaviour that you could likely scrap the entire cash based system without any significant changes to spending. This particular affect also applies to saving, since if you have lived on a strict spending control for a while you likely have a set amount of savings. For lack of a better term, I will call this the inverse law of control: the more you control your spending over the years, the less likely you actually need that level of control.
For example, I could stop taking out my spending cash, shove my Visa in my hand for a month and tell me I have an unlimited spending budget. Guess what, I would suspect over a six month average my spending won’t change all that much. The habit is so ingrained the idea of an unlimited amount of spending is meaningless to me. I would actually find it difficult to spend my full salary in a year since I’m so used to saving the majority of it.
Of course the law cuts both ways, those that bleed money every month and don’t save usually have the least amount of controls on their spending. So putting on training wheels of cash in jars is actually a good idea in the beginning, but in the end if people really have changed, they won’t need the system after a while.
So what controls do you use on your spending? Have you ever tried taking them off?