Shop Like It's 1997

Photo by Nik on Unsplash

Add Friction

One personal finance “hack” that you can implement immediately: shop like it’s 1997.

Picture yourself in 1997, when the notion of swiping a credit card for a fast food meal raised eyebrows, and online shopping was in its infancy, limited to platforms like early eBay and the humble beginnings of Amazon, which exclusively sold books at that point.

A year ago, I implemented this. I committed to making only online purchases when necessary. Otherwise, I go to a physical store for the purchase. Here's my perspective: If I'm not willing to make the effort to go to the store and purchase it, chances are, it's not something I truly need.

Additionally, I reintroduced cash into my daily transactions, opting for tangible currency over digital convenience.

Previously, I was very much “cashless” and swiped for everything.

I realized that I was spending significantly more money when I relied on card payments compared to when I used physical cash. Switching to cash for my purchases resulted in a noticeable decrease in my spending.

Key to this move was drastically restricting my online shopping habits. I used to buy practically everything online, add it to the Amazon app, and have it delivered within 24 hours via Prime. Instead, I decided I’d only buy things online if I could only buy them online. If there was a store in my town that I could buy it from, then I’d wait and purchase it there.

In the past, my default approach for minor essentials like mouthwash, razors, or toothpaste might have been to add them to my Amazon order. However, I opted for a more mindful approach by adding them to my weekly grocery list. This minor adjustment helped me avoid impulsive online purchases and encouraged a more conscious shopping routine.

Recognizing the pitfalls of convenience, I also decided to cease using Instacart altogether. While initially convenient, I succumbed to the allure of adding extra items to my cart with each order. The fees and tips were also astronomical, adding 20-30% to my order. I justified it as a convenience, as I was swamped. In reality, it was laziness.

Takeout has never been an issue for me, and I’ve always mostly cooked groceries at home. When I get takeout a few times a month, I typically drive and pick it up. However, takeout via delivery apps is a significant issue for most consumers. Ordering via an app can significantly add to the cost of the order. Not to mention that takeout is often uneconomical compared to cooking groceries at home.

Surprisingly, this ‘shop like it’s 1997’ rule was a simple adjustment that had a profound impact on my spending habits. Without sacrificing my lifestyle, my expenses noticeably decreased.

Why 1997?

The choice of 1997 is deliberate. It represents a time when credit card usage was viewed with skepticism for small purchases, like a meal at a fast food joint. While plastic payment options existed, they were met with disdain, questioning the financial state of anyone resorting to such methods for everyday expenses.

Since then, shopping has undergone a dramatic transformation. Plastic cards and now options like Apple Pay have made spending frictionless.

In the early days of online shopping, it demanded intentional effort, involving navigating through limited options and meticulously following a step-by-step purchasing process. You'd usually venture online with a precise item in mind, visiting the website, conducting thorough research, input your credit card details, and patiently waiting a week or two for delivery.

However, today's online shopping experience is markedly different. With a mere click, you can impulsively purchase items, often prompted by algorithms presenting products you hadn't even been seeking. The item is then conveniently delivered to your doorstep within 24 or 48 hours.

Online shopping has become a lightning-fast process. With just a few taps on your smartphone, you can instantly purchase anything from Q-Tips to automobiles. The proliferation of apps has made shopping a breeze, but this convenience comes at a price. The temptation of effortless spending, combined with hidden fees and inflated prices, can quickly eat into your budget.

Services like Instacart exemplify this modern dilemma, where the ease of ordering is offset by additional fees and the temptation to overshop. Clicking to add items to your virtual cart has replaced the careful consideration of purchases, ultimately eroding the barrier between your money and impulse buys.

In essence, the modern era prioritizes convenience over conscientious spending, often resulting in inflated expenses.

You can regain control over your finances in an age of unprecedented convenience by reverting to a mindset reminiscent of a time when each purchase required thought and deliberation.

I also chose 1997 for its significance as a period of economic boom times in the United States. That year was marked by remarkable prosperity: GDP surged by 4.5%, the S&P 500 soared by 33%, and unemployment remained low at 4.9%. Notably, the country celebrated its first budget surplus in nearly three decades.

During this era, optimism permeated the national psyche. The advent of the internet and the adoption of personal computers fueled innovation and economic growth.

However, despite this prosperity, there existed more friction in spending money. You couldn’t pull a micro super computer out of your pocket and have someone deliver your groceries.

‘Shop like it’s 1997’ isn’t particularly austere. I'm not advocating for a return to the frugal lifestyle of the Great Depression era in the 1930s.

I'm merely inviting you to imagine yourself in a prosperous time when the economy thrived, and most modern amenities existed. Back then, there wasn't much deprivation. There was merely more friction involved in making a purchase. Smartphones weren't ubiquitous, online shopping was still in its infancy, and the widespread use of plastic cards had yet to reach today's levels.

You Are Not Mr. Spock

This may seem unconventional at first glance. You might argue that you possess enough discipline to handle these purchases, considering them merely convenient and believing that the lack of friction doesn't lead to overspending.

However, let's delve deeper. Consider those Amazon packages that regularly arrive at your doorstep—are all those items genuinely essential? Even for someone like me, who prides themselves on financial discipline (okay, I’m a tightwad), it's easy to fall into the trap of overspending online.

Even for a self admitted tightwad like me, I found my online spending gradually increasing.

That's when I decided to conduct this little experiment.

The aim was to boost my savings rate, and it proved successful. I appreciated this approach because my savings rate is something I have direct control over. Unlike the unpredictable performance of the stock market, my savings rate is entirely within my control.

Cash Is King

You might be hesitant to adopt this approach due to the allure of credit card rewards. By choosing to spend more cash at physical locations, you'll accumulate fewer rewards. Many credit cards offer rewards programs, typically around 1-2% on purchases, with occasional 5% bonus categories like gas stations or grocery stores.

However, in the grand scheme of things, these rewards pale compared to the potential savings from spending less money overall. In my experience, transitioning from frequent credit card usage to cash payments resulted in a remarkable 20% reduction in spending.

This phenomenon can be attributed to the subconscious impact of cash transactions. When you physically hand over cash, a tangible sense of loss prompts more conservative spending habits. Unlike credit cards, where the pain of payment is delayed until the bill arrives, cash transactions require immediate reckoning with available funds. As a result, people are naturally inclined to spend less when using cash, as each expenditure demands more thoughtful consideration.

You might also have reservations about carrying cash due to concerns about potential theft. First, if you're being robbed, the loss of cash from your wallet is likely the least of your worries. Second, I would advise carrying only what you're comfortable potentially losing.

Having cash on hand is also enjoyable. There's a sense of satisfaction in carrying around a wad of bills, knowing that you have something tangible that can be used to pay for goods and services at a moment's notice.

Finally, consider this: when you hand someone cash, there's no chance of them spinning around an iPad and demanding a hefty tip for a simple service like handing you a coffee cup. With cash transactions, straightforwardness and transparency eliminate the pressure of unexpected fees or gratuities often associated with digital payment methods.

Less Is More

Many people resist cutting back on spending, believing that happiness is directly correlated with spending more money. This perspective is deeply flawed.

Does a heap of Amazon packages stuffed with items you don't truly need contribute to your happiness? While I'm all for spending money on things that genuinely bring joy, much of what we impulsively purchase online is driven by the ease with which algorithms push products.

It's time to break free from this cycle. Excessive spending drains your finances and fails to bring lasting satisfaction or fulfillment.

I'm not suggesting extreme minimalism, where you pare down your wardrobe to just a handful of items or strip your living space bare. Instead, I'm advocating for a more conscious approach to spending, cutting back on mindless purchases that don't truly enhance your happiness. You'll be surprised at how quickly these seemingly insignificant expenses can add up.

Try It Out

Regardless of your reservations, give it a shot. Transport your spending habits back to 1997. What do you have to lose?

Cut back on unnecessary online purchases. If you're not willing to make the trip to a store, chances are you don't need it. Opt for cash payments whenever possible.

You'll likely discover that your spending decreases significantly without any noticeable impact on your quality of life. And the best part? It happens naturally, without the need for strict budgeting or austerity measures.

Give it a try for a month. I'd love to hear your feedback and whether it worked to help reduce your spending.

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