How to hit reset on your spending
Do you have the feeling that your spending has gone awry? Almost everyone has that sense at one time or another. If you’re in that camp right now, it might be time to hit the spending reset button.
Here’s how to do it: Try a simple experiment. For a week, limit yourself to just the basics — cut out expenses like eating out or going to the movies — and see whether you can reset your level of spending expectations. Treat it like a game or a temporary experiment and you may find yourself becoming accustomed to the changes sooner than you think.
You can then extend that experiment to two weeks, or even a full month, to really gather the data on your basic spending habits. You may also realize you have more money in your account than you expected, which can be applied to savings or a retirement strategy. You’ll help yourself avoid being one of the 44% of Americans who are worried about having their retirement savings last as long as they need it to.1 Establishing a strategy for your retirement savings is an important step, since financial professionals traditionally recommend that people save 15 to 20 percent of their gross income. When you decide to add your extra expenses back in, you’ll have both a better grasp on your spending patterns and more appreciation for where your money goes.
Riding the adaptation phenomenon
This experience is based on a psychological phenomenon known as “hedonic adaptation,” which refers to people's general tendency to return to a set level of happiness despite life's ups and downs.2
Assessing needs versus wants
The key ingredient in resetting your spending habits is identifying what the basics are and what things you can do without. It’s a matter of pinpointing wants versus needs. What you need or want may not be the same as everyone else, so you’ll need to do some soul-searching to determine what you can do without. You can continue to fine-tune your budget to suit your own situation and help you modify your saving habits.
Navigating obstacles and reaping the benefits
During your spending reset, be prepared to encounter some obstacles — and unexpected benefits. If you’re accustomed to eating out several times per week, it can be hard to change your habits, but you may find that by cooking more at home you get the added benefit of eating healthier meals on top of saving money. If you cut down on shopping, you might miss your retail therapy, but you may come to appreciate the clothes you already own even more. Whatever your “thing” is, you can experiment and assess the results on your saving habits.
Temporarily cutting back your spending to the necessities can be a useful way to assess where you’re overspending, while gaining a few extra dollars along the way that can be applied to any number of things, including savings and retirement. And thanks to the phenomenon of adaptation, you’re likely to discover that it isn’t that hard to modify your spending habits and get used to your new regime. After your experiment, you can slowly and thoughtfully add back the things you really miss as you grow into a more aware and resourceful spender.
Disclaimer:
1 Retirement Redefined: How this chapter of life is evolving, Guardian's 14th Annual Workplace Benefits Study, 2025
2 Elizabeth Scott, PhD, The Psychological Reason You Can't Seem to Stay Happy, Very Well Mind, May 19, 2025
Material discussed is meant for general informational purposes only and is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon only when coordinated with individual professional advice.
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