ELFI is monitoring the Coronavirus (COVID-19) outbreak and following guidance from state and federal agencies. If you have been impacted by the Coronavirus, our Customer Care Center is available to help you.

Why It Is Time to Say “No” to Retail Therapy

A wise blogger at Forbes recently said, “The road to bankruptcy is paved with good deals.”

Think about it. Each of us has a favorite store, accessories, tech goods, or some other non-essential item that is either just a little too pricey or is simply out of our budget…that is, until a sale hits — at which point, all budgeting bets are off.

If you want to start saving money, paying off debts, and generally begin to improve your financial situation, this has to stop — right now. Stop letting the blow-out sales blow out your budget. Not sure where to start? Try your closet.

For many people, one of the biggest budget-busting expenses is clothing. While the U.S. apparel industry is a smart $12 billion business, our ability to see and be influenced by more people, thanks to the internet, has caused us to continuously want more, want to look a certain way, and to splurge. These spending habits on clothing, according to the Bureau of Labor Statistics, mean that the average American family is annually spending somewhere around $1,800 on apparel and services (2015 statistics). Furthermore, as clothing prices have dropped over the decades — and as each of us are increasingly willing to place non-essentials on credit cards — purchasing extraneous wardrobe items has become too simple. For example, today’s American woman owns roughly 30 outfits, but in the 1930s, that number was nine. NINE outfits. Regardless of the actual number of items in your wardrobe, chances are that most of us do not even wear half of them, even if seasonal pieces are excluded.

As the average home size increases, our collective desire for more “stuff” is further depleting our hard-earned dollars. Furthermore, this “shopping for sport” or retail therapy takes up valuable time, both for shopping and maintenance, that could be spent in more productive ways, such as learning something new, building a career, spending time with family, researching more ways to save money, or doing other healthy things like exercising or sleeping.

6 Ways to Say “No” to Retail Therapy

  1. Banish the idea of retail therapy. You do not need more clothes to be happy and, chances are, your spending in this category could be causing you stress.
  2. Focus on quality clothing over quantity. Invest in a few timeless clothing pieces that will last longer, rather than buying more cheap clothing pieces that will go out of style or deteriorate quickly.
  3. Before you buy anything, ask yourself if you really need it, if you already have something like it, if it is worth “X” hours at work, or if it fits into your budget. In most cases above, if the answer is “no,” do not purchase it.
  4. If you do buy something, save the receipt. Return it if you do not wear it within a week.
  5. Start rediscovering what you already own! Revisit your wardrobe to find new ways to put outfits together. Need some inspiration? Check out Pinterest. Only pin outfits that you already have the pieces to complete the look or something similar. While you are working on your closet, cull it of any clothing that just is not working for you anymore.
  6. Create a capsule wardrobe. If you can, try to create one that mostly features pieces you already own — but make sure you love 100% of them. A capsule wardrobe is a versatile, minimalistic wardrobe that is meant to de-stress the idea of getting dressed, ensuring that you are going to love what you have to wear, all while minimizing spending habits on clothing. To achieve your ideal capsule wardrobe (a wardrobe that really suits your style), you may have to do a little shopping, but any wardrobe pieces you buy should fall under the principle of quality over quantity.

Going through your own closet to see what you already own — whether to rediscover or to build a capsule wardrobe — is a great way to appreciate what you already have, but it is also a great way to declutter and destress your life. Putting the brakes on a shopping habit, all while honing in on your ideal wardrobe, can be a great way to maintain a budget and feel great about what you already own, so let this be the year you say “no” to the idea of retail therapy and say “yes” to better finances, less stress, and a happier you!

How to Budget Using the 50/20/30 Rule

One of the first steps to financial success is learning how to budget and sticking with it. Setting up a budget provides visibility and control over personal finances, allowing individuals to track how much they are spending and where and helping them avoid frivolous spending by staying within set limits. However, traditional budgets are not for everyone and for young professionals at the beginning of their financial journeys or business owners and freelancers who might have irregular incomes, sticking to a complex budget may be difficult. Fortunately, there is a different approach to budgeting that is more flexible and easy to use — the 50/20/30 budget.


This budgeting system is perfect for people who think they are “bad” at budgeting because it does not require meticulous record-keeping or maintenance. Instead, it is simple and less stringent, and can really work where traditional budgets have failed. The 50/20/30 budget works on a percentage system, with 50 percent of total income going toward paying fixed expenses, 20 percent is allocated to savings or other financial goals, and the remaining 30 percent is flexible spending money. Let us break it down a little further:


50% – Fixed Expenses/Essentials


Instead of allocating money into dozens of different categories as one would in a traditional budget, a 50/20/30 budget only has three categories. The first, and largest, is fixed expenses or essentials. These expenses are the things that take precedence over all other expenses, as they are the things you cannot live without. These include rent or mortgage payments, insurance, utilities, auto or education loan payments, and anything else you consider essential.


Groceries are essential expenses as you cannot live without food, but because buying groceries is a variable and not a fixed expense, it can fall under the essentials category or the 30 percent flexible spending category — this is completely up to you.


20% – Savings/Financial Goals


Remember the financial goals you set last month? This is where they will go. Money that goes to this category is for saving or investing. Whether you are saving to build an emergency fund, putting back money for retirement, or trying to pay off your student loans or credit card debt faster, 20 percent of your take-home pay should be allocated to this category.


30% – Discretionary Spending


Here is the fun part — the remaining 30 percent of your income is for flexible or “lifestyle” spending. These are things that are not necessarily needed, including travel, clothing, eating out, entertainment, gifts, and anything else on which you enjoy spending money. This percentage is intended to make life fun; however, if you find yourself needing to cut back on spending, this category should be the first to go.


The Perfect Budget for People Who Need Flexibility


One of the greatest benefits of the 50/20/30 system is flexibility. If you are at a time in your life when you want to achieve a financial goal, such as buying a home or paying down debt faster, you can adjust the percentages you allocate to each category. For example, if you total the costs of your fixed expenses and they equal 53 percent of your total income, you can adjust your discretionary spending category to equal 27 percent each month. It is all about what works for you and your particular financial situation. If you are notoriously “bad at budgeting,” and you have only tried traditional methods, this may be the right method for you.


Reward Cards and Accounts