Thursday, September 25, 2008

Cornerstones of Saving — Part 2

One of our fellow bloggers who also tends to talk quite a bit about Japan recently married a Japanese woman and came to Japan to live after completing university. He was concerned about debts from his education and getting them paid off as quickly as possible. I told him that my husband and I had managed to save nearly as much as his entire educational debt in the two years since I quit my former job so I was sure he could get those debts dealt with pretty quickly if he was careful with how he spent his money. (All the money we save, incidentally, has all gone into savings for when we're old and grey and can no longer work.)

You might assume that we make a lot of money. The truth is that we do not and our rent is pretty high (110,000 yen). The money we saved during those two years represented about 35% of our income. We don't make a small amount of money, mind you, but my CH isn't in a high-paying job and I only worked 5-10 hours a week from home during the two years in which we saved that amount of money. The way we save a fair bit is by not spending what we get. This isn't as hard as it may sound, but it does take awhile to reach a mindset where living well below your means doesn't feel like a burden or sacrifice. For us, it evolved naturally so we've never found ourselves pining for things. I consider us very fortunate in that regard.

I've come to understand that there are 3 cornerstones to reducing your spending:

1. Cook for yourself from real (whole) food ingredients (never pre-mixed, pre-bagged, or pre-made).

2. Don't buy new clothes or shoes unless you need them (never buy because they are attractive to you or you think you'll look good in them).

3. Never shop to entertain yourself or to mitigate unrest in your life.

If you follow these, your spending will be dramatically reduced. Most people waste their money on incidental items they rarely need or use, convenience, and the momentary "high" of obtaining something novel. If you scrutinize the pleasure your spending habits bring you, you'll likely see very few of the items bring long-term pleasure or fulfill recurring needs. Most of the pleasure you get is from looking at the items, considering buying them, making the purchase, and carrying the bag home. Once the item is in your possession, there is definitely a letdown for many purchases.

Most people can't get past the idea of "deserving" the reward of buying something they want so they justify wasteful spending as a way of making working worthwhile. They feel empowered by the freedom of obtaining what they want when they want it and choose the immediate small sense of freedom over the long term freedom that comes from financial stability and security. I won't say that, if you hate your job and have to placate yourself by buying junk, it's probably time to consider a different job which doesn't make you as miserable but may pay less because I know that's unrealistic for many people. However, it is worth considering.

I'm not judging anyone for their spending habits, mind you. We all make stupid decisions for short-term benefits because life is hard sometimes and some little tidbit can make us happy for awhile. However, if saving money is important to you, you have to change your entire mindset about shopping and the acquisition of possessions.


Joseph said...

Advice noted! I think we're fortunate in that I'm used to budgeting as a student, and my wife has never shopped for pleasure. Budgeting is becoming a game - how little can we live on?! We also both enjoy cooking which is handy. I think my wife is very patient with my experimental British-Japanese style!

Orchid64 said...

Though this may appear to have been inspired by your circumstances, this sequence of posts was actually inspired by a post on Apartment Therapy where I wrote a comment which I felt would have better been suited to a post.

I'm sure you'll do great as you seem pretty level-headed. Well, except when it comes to new Apple products... ;-) I kid, of course, though I wonder if you may have taken more than your fill of iPhone-related guff by now.

Any time anyone mentions fusions of Japanese and other types of cuisine, I remember the Fawlty Towers episode ("The Health Inspecter"?) where Basil is talking about the "veal substitute" which is a "Jappo-Norwegian" mix which is not very good.

Thanks for commenting!

Anonymous said...

You're so right about the impulse buying, especially after surviving a crap-ass job for a few weeks...We've basically been saving nearly every penny (er...beyond the occasional ramen or yakitori out! ;) ) since I got here, mainly because we simply don't have the space to put anything in, but also to save to move to a new place, and to be honest, it's not all that bad...

Until now...

Maaan, when I got my first "paycheck" in the bank, the first thing I did was buy a teeny portable grill so that my husband and I could go to a picnic at Osaka Castle Park, which is something we'd been talking about doing since March. Mmh...It's hard to say whether that's a waste or something we'll really come to cherish and remember (not to mention just have around when we want to get outside for some grilling!)...To me, it seems like something that'll last a good long time and felt worth the investment, though we hardly NEEEEEED it. :) ....Crap, now I just guilted myself into submission again... ;)

I guess the point was that I'm right on with your saving tips, and even though I made that grill splurge, I'm SO much better at saving now, than I was when we lived in L.A! We're going to need it!

Orchid64 said...

I don't think there's anything wrong with buying some item you enjoy as long as it gets used and pleasure is derived from it! :-)

So, as long as you go on those picnics, there's no reason to feel guilty!

Please keep in mind that I'm not judging anyone's buying habits, just giving some advice. Even though I don't shop to entertain myself, I sometimes wander over the Amazon when I'm bored or depressed. I don't buy anything, but I do look.

Roy said...

Agree with your advice here. Although if you're a single guy, unless you are a antisocial hermit you can't avoid spending money for social activities like going out on a date etc. Especially when you get older and still going out with young girls, they expect you to pay for everything! Totally not fair!! :-(

For me the resistance to buy is more because I want to avoid accumulation of stuff rather than just save money. If I do end up buying something, I also use the one in, one out method to avoid having a house full of junk.

Orchid64 said...

I must admit, I hadn't considered the perspective of a single man who has little choice but to socialize outside the home and definitely hadn't considered dating! In Japan, I'm guessing you will always have to pay for everything, but I've read that those who date each other regularly in the U.S. will start to split expenses once the relationship is established. The CH and I never dated so there was never a precedent set for either of us paying. We've essentially lived together from the moment we met face to face and shared all money.

I used to go out to socialize with friends, but now I do it at home. I don't do it for cost but rather for comfort because it's hard to talk in restaurants, bars, etc. and you don't have to worry about smoking or other atmosphere issues in your own home, but I guess entertaining at home isn't a real "single guy" activity.

Like you, I also want to avoid accumulating junk. That's where my mindset developed (from decluttering and realizing new stuff = new clutter). I try to continue on a "one in - one (or two, or three) out" idea, but mainly, I just rarely buy new stuff that isn't consumable or useful.

I'd like to reach a point where my closet is almost empty or only full of empty boxes for electronics items and winter/summer swap items. I'm close to that, but there are still books and computer equipment lurking in storage.

Thanks for commenting, Roy!