At least once a year I like to do a cleanse. It often makes me feel lighter and healthier and generally better about myself. I find that afterwards I have more confidence in myself and feel more positive about the future. Not surprisingly, January is a great time to do this cleanse, especially after the excesses of the holiday season, but for me September is also a great time.
And no, I am not actually talking about a health cleanse here. I’m talking about a financial detox.
Unlike a health cleanse, fast or detox for your body, the idea of a financial detox is more likely to be taken badly by your friends and associates.
I honestly don’t understand why. After all, we are happy to put ourselves through all kinds of pain and suffering in the name of health, sport or beauty (I’m thinking of marathons in particular here). Yet when it comes to money, many people have a problem with the idea of restraint. Try to cut back on your overspending and you’re more likely to be criticised as “radin” or too “tight”.
Yet, in the same way that a health cleanse can make you feel so much better, a financial detox will not only free up your wallet but can help your spirit too.
So what does a financial detox involve? I’ll give you an example. A few years ago, following the Great Financial Crisis of 2008, I read a book called “How I Lived a Year on Just a Pound a Day” by Kath Kelly. Inspired by this book, I decided to live on 2 euros per day for 1 month.
Now when I say “lived on”, I mean that money had to cover my food, entertaining and transportation costs (not rent or amenities) – the same way Kath Kelly did it.
I have to say, it was hard, but I managed it and at the end I found I had many benefits:
1. I had a nice pot of money saved that I could spend on something I really valued, rather than frittering it away on little things that weren’t really necessary.
2. I felt like I had de-cluttered and cleansed my finances so that I was more in control and less worried about approaching bills (especially the dreaded tax bills that usually hit in September).
3. It made me feel more confident in my ability to be able to handle financial hardship should some disaster occur, like a job loss or a large new expense like a baby/house purchase, etc.
4. It also forced me to be more accepting of money that came to me freely. This might sound strange, but I for one often feel better about paying for other people than allowing them to pay for me. During my detox I didn’t tell anyone, apart from my investment club friends, that I was doing it. But my rule was that if anyone offered to buy me something like a drink or dinner I was allowed to accept – as long as I was sure they were offering naturally and not because they knew I was only living on 2 euros a day.
Of all of these benefits, I have to say that the third point – empowerment – is really the most important. Many people worry about money and they particularly worry about what they will do in the future if they suddenly have a reduced income. I can’t count how many times I’ve had this conversation with women, particularly regarding retirement. While I think it’s important to build up as much as you possibly can for your retirement, I also believe that learning you can actually live on less – and still be happy – is of great benefit.
So I challenge you: why not make January your financial detox month?
You can choose whatever figure you think is appropriate for you, but just make sure you stick to it. It could change the way you think about money forever.