It’s Tuesday. I wake up, shower and rush out. I stop to buy coffee. I stop to get a smoothie. I swing through the drug store and buy a few items (some items are necessities, some not so much). I take a cab to work. I buy a salad at lunch. I get a second coffee at 2pm. I go for drinks after work. I order Seamless when I get home. I place an order on Amazon (some items are necessities, some not so much) while streaming a show. I buy an app for my phone so I can meditate. I sleep. In the course of my normal, mundane Tuesday, I spent $200 on “ether” spending and all I have to show for it is a lot of calories, a new lip gloss and some gum.
This, my friends, is what I call “ether spending”. One friend describes it as the syndrome where you are too “comfortable” (not freaking out about cash flow but not being overly thoughtful about it either). I say that ether spending is careless and it can lead to blowing exceptional amounts of hard-earned cash. Ether spending is an extremely common theme among millennials and Gen Y-ers and, in my observations, is often the main reason why people can’t save money. I want to differentiate ether spending from shopping. When you shop, at least you take home something that has some kind of value attached to it. When you ether spend, it’s generally on beverages, food, transportation, and once it is consumed, it is gone forever (into the ether).
Our Evolving Cashless World Is A Slippery Slope To the Poor House
One of the dangers of ether spending is that as we evolve further into a cash-less society, ether spending will continue to get worse, if you are not more mindful. If you are someone who pre-orders coffee or pays with your phone, orders online, or uses services that are on auto-pay, you have to be extremely careful about this. In reality, you haven’t actually taken out cash or a credit card to pay for anything throughout the day. Your “comfortable” brain is telling you “it’s all free girl, go get it” but in reality, your bank account is dwindling.
Convenience Ain’t Cheap
In my estimation, the average urban-dwelling millennial spends anywhere from $50-150 per day on ether spending. The lower end of this range is an annual $18,000 per year on ether spending. Where does it go? As I noted above, it goes to food, drinks, services, transportation, and convenience. There is so much buzz about this new economy where everything is readily attainable but this convenience comes with a cost. Ordering in from Seamless every night is easy but you pay $5-10 more per transaction than if you cooked for yourself (eek!) or had you just walked into a deli and ordered.
How Do We Stop Our Ether Spending
Now that we have identified the bleed, let’s try to fix it. First, you can’t fix your problems without doing a little reconnaissance. The first step is to look at your actual spending. It’s a bit frightening at first but it is part of the process. You have to check that bank account or credit card statement at least twice a week. I recommend Monday (post-weekend check-in) and Friday (end of week check-in). Understand and start to track some of your ether spending. “I spent how much on green juice this week?” “I could have taken the subway instead of those eight cabs.” Once you have identified where it’s going, you need to devise a plan to mitigate it. For example, I no longer buy coffee in coffee shops. I make my coffee at home. It’s so cheap and it’s made exactly how I like it. I estimate that I save about $1500 per year on coffee alone.
Habit Forming Is The Key
My advice here is to start small. Start with one thing and try your hardest to stick to making this one thing a HABIT. Gretchen Rubin says that forming good habits leads to increased happiness. I tend to agree. We brush our teeth every morning without grumbling about it. Ideally, developing better money habits will eventually be as easy as brushing your teeth. But you have to start small, remain focused, stay on track and develop each financial hygiene habit one at a time. Asking you to completely change all of your spending habits is unrealistic and unattainable. So pick one thing you want to change and stick with it. At the end of the first week, tally up how much money you saved by lowering your ether spending. Do it again after a month. As you get more entrenched in habit forming exercises, you realize that it’s not that difficult and it’s saving you a lot of money.
What Do I Do With My New Found Fortune?
This is a great problem to have and this is where the fun begins! I have a million awesome things you can do with your new money. You can put it in your retirement account. You can increase your savings account. You can invest it! The opportunities are endless! So many exclamation points!!! Get started and as always, keep me posted on your progress.
Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC Investment Advisory services offered through Raymond James Financial Services Advisors, Inc.
Kristin Merrick, Financial Advisor, O’Keeffe Financial Partners, LLC
Originally published in Forbes, Aug 30, 2018.