Conquering Overspending: Benjamin Franklin’s Tips for Controlling Spending and Curbing Impulses

August 19, 2024 TruthUSA

Commentary

Countless books have been written on personal finance, financial planning, investments, debt management, and money in general.

When reading these books, a common theme emerges: Personal finance, in theory, is a simple discipline.

It all comes down to a few key principles that govern wealth creation: “Spend less than you earn,” “Own more than you owe,” “Quickly pay-off high-interest debt,” and “Pay yourself first.” These principles are familiar because simplicity is key.

But despite the simplicity of these principles, many people in both Canada and America struggle with their finances. Why is it challenging to control spending habits, save money, and resist the urge to overspend?

This is because many other psychological, behavioral, and societal factors influence our financial decisions, leading to difficulties. To address this, I will discuss a method to bring these factors into perspective and deal with them effectively.

While external factors like the economy, government, and inflation affect our financial situation, managing spending, budgeting, and debt requires introspection beyond these influences.

We need to challenge our current money beliefs and consciously assess spending choices from a prioritization standpoint rather than impulsive decisions. The key is to make spending behavior a conscious process, analyzing it with mindfulness and self-discipline.

In this article, I will elaborate on a method to achieve this, including utilizing Benjamin Franklin’s approach to categorize and prioritize expenses, purchases, and savings.

If you fail to create a list of spending priorities consciously, external influences like marketers, advertisers, or societal pressures will shape your decisions. Thus, be vigilant and take charge of your financial decisions.

Ben Franklin’s Approach to Spending

In several writings, including his “Poor Richard’s Almanack“ series, Franklin discusses the essentials, conveniences, and luxuries of life.

Essentials are unavoidable necessities, conveniences enhance life but are dispensable, and luxuries should be avoided at all costs.

In “Poor Richard Improved, 1756“, Franklin advises limiting spending to necessities and a few conveniences, saving the rest for the future.

He cautions against pride, vanity, and accruing debt for luxuries, emphasizing the importance of financial prudence.

Whether saving half your expenses is feasible is subjective. However, Franklin’s message is clear: Be conscious of spending and prioritize to save money, living within your means.

In the book “Uncommon Cents: Benjamin Franklin Secrets to Achieving Personal Financial Success,” the authors delve into Franklin’s financial wisdom, offering actionable tips based on his classification of expenses.

They introduce the “Belief Window” and “Spending Window” concepts to help individuals understand their beliefs and align spending with priorities.

Your “Belief Window” embodies your money beliefs shaped by life experiences, influencing your spending decisions. The “Spending Window” allows you to evaluate expenses in relation to priorities, emphasizing conscious decision-making.

Ranking expenses and purchases into categories like “Vital,” “Important,” “Nice,” and “Worthless” helps in prioritizing and managing spending effectively.

The four categories to rank your expenses, and their related Franklin equivalence, from "Uncommon Cents." — The four categories to rank your expenses, and their related Franklin equivalence, from “Uncommon Cents.”

Classifying expenses into “Vital” and “Future Vital” helps differentiate between current and future financial obligations, aiding in effective budgeting.

Utilizing this exercise enables a comprehensive view of your financial landscape, facilitating informed decision-making and fostering fiscal discipline.

Implementing these principles, such as saving for retirement and prioritizing essential expenses, ensures financial stability and cultivates prudent spending habits.

By consciously managing your money decisions, you gain control over your financial future, avoiding impulsive spending and fostering a sustainable financial outlook.

Embracing the “Spending Window” methodology empowers you to navigate financial challenges with clarity and purpose, enhancing your financial well-being.

Integrating this approach into your financial planning cultivates self-discipline and resilience, setting the stage for long-term financial prosperity.

Applying the “Spending Window” methodology is a transformative financial endeavor with far-reaching implications for your financial health and personal growth.