Sustainable Spending

Sustainable Spending: What the Green movement can teach us about managing money.

In an environmental context, “sustainable” refers to something that can be “maintained at a steady level, without exhausting natural resources or causing severe ecological damage”. I have reapplied that idea to personal finance with what I call “sustainable spending”. That is, to maintain your spending at a level which will not exhaust your resources over time.

I prefer this approach to traditional budgeting, largely because I don’t think the strict and time consuming process of counting your pennies actually works over time. Sustainable spending is a simple process that has you make some choices about how you work and live so that you don’t have to keep track of every little thing. There are 3 steps to the sustainable spending approach: analyze, brainstorm and change.

A) Analyze: Where is your money coming from and going to? Grab your credit card and bank statements and calculate how much of your money is going towards your mortgage/rent, food, transportation, entertainment, pets, hobbies etc. You might be surprised at how much you spend in some areas, or how little you really know about where your money goes.

B) Brainstorm: What could you do to increase your income or cut your spending? This is the time to get creative and include on your brainstorm list things you might never actually do. Get a roommate, sell your engagement ring, work a second job, cancel cable, set up auto-withdrawals into your savings account etc.

C) Change: Commit to change two or three things that will make the biggest difference to your financial situation.

Working on sustainable spending for a few hours once or twice a year can reap big rewards and help you get a handle on your money so you can live the life you want.