What Is Underconsumption and How Can It Help with Your Finances?
We've heard about living large, but what about spending little? A look at underconsumption and how this social media trend can boost your financial wellness.
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You might be aware of overconsumption, where you spend freely and live large – sometimes beyond your means. With the current total credit card debt in the U.S. at an all-time high of $1.14 trillion, many folks feel the sting of racking up high credit card balances.
But what is underconsumption? You might've gotten wind of this trend that's gone viral on social media. As the name implies, it's not just about consuming less, it’s also about spending with intention. Here, we'll look at this social media trend and how it can benefit your money situation.
The Ins and Outs of Underconsumption
Underconsumption is a trend taking over by storm, explains DJ Jack, a financial planner at the advice-only financial planning firm Abundo Wealth. "Credit card debt is a big problem in this country, and a major contributor to that is our consumer culture of buying the latest trendy items – especially popular things on social media," he says.
While the "underconsumption" term may be new, its core tenets blend minimalism and classic personal finance principles. When you consume less, you are likely to spend less. Beyond that, it's about only buying what you need or fixing what you already have before purchasing a new item and aligning your purchases with your values.
Pros and Cons of Underconsumption
Let's take a look at the advantages and potential downsides of underconsumption:
Pros
Saves you money. Probably the largest benefit of underconsumption is that you put more money into your pocket. When you save money, you free up funds toward other financial goals – such as tucking away cash for a rainy day, paying off your credit card debt, or saving towards a milestone goal, like a downpayment for a house or a vacation.
Connect your values to consumer habits. Jack says that many people who need to reduce spending struggle to define their "why," which makes it hard to make a budget. "The underconsumption trend can provide an awesome "why" by linking lower consumption to helping the climate - and even making it a badge of honor socially to avoid trend-spend."
Take pride in spending less. In the past, spending as little as possible could be considered being cheap or stingy. But because now that it’s seen as trendy, underconsumption can be cast in a new light. And as it becomes mainstream, you can talk about it with your friends and maybe inspire underconsumption in others.
Cons
Going too far. Jack warns against being so frugal that you miss out on opportunities. Underconsumption should ultimately be a move to be in greater sync with who you are and your values. If you get too extreme, you could miss out on enjoying what life offers. "If you love to travel, take a trip," says Jack. "If you love fashion, buy a fun item or two every year. Just like a diet, it has to be sustainable to work."
Steps to Underconsumption
If the idea of consuming less entices you, here's what you can do to partake:
1. Declutter
When you purge your current belongings, you can take stock of what you already have. Not only will it help clear your space, but you can see what items you have in excess. It also helps you glean insight into your spending habits.
Along the same lines, organize your stuff. You can more easily find something when you go to grab it. Plus, you'll have easier tracking when something runs out versus buying something pre-emptively.
2. Clean up your finances
Besides purging your tangible items, consider your finances, too. For example, review your expenses and see what you can cut back on or eliminate completely. Also, take stock of your subscriptions.
An easy way to see where your money is going is to sign up for a budgeting app and see the categories that are taking a big toll on your monthly budget, suggests Jack. "People are often surprised to see how much they spend on dining, Amazon, car expenses, and clothing purchases."
It's also a good opportunity to examine your debt and determine whether you're doing your best to pay it off. By focusing on debt payoff, you'll eventually have more money freed up for present and future you.
3. Only buy what you need
Make an effort to purchase only items you need, and try to fix broken items before you buy replacements. Going minimalist should be done in moderation, so make room in your budget for items you enjoy.
If you're overwhelmed by where to cut back, it's always more impactful to cut back in a big category than a minor one, says Jack. For instance, canceling Netflix only goes so far, but slashing the cost of your car insurance premium by shopping around for a new policy could make a big difference.
4. Share it out
Brag about it on social media! Share your wins, find other likeminded people, and if you're struggling, be transparent with the areas you're working on. Maybe you spend too much when going out with friends or tend to go on mini-shopping binges when you're bored on your phone or computer.
Connecting with others and building community can help you release any shame or negative feelings about your journey and get the support you need to more fully embrace underconsumption.
Bottom line
"Spending less than you earn is the key to building your financial independence, and buying fewer, better-quality items really helps," says Jack. Underconsumption is one of the few social media trends that can actually benefit your money. Here's hoping it stays.
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Jackie Lam is a personal finance writer whose work has appeared in Salon, Business Insider, and GOOD.