Michela Allocca believed that saving money meant spending as little as possible.
“When I was in my early 20s, I didn’t really know what to do with my money, so I just saved as much as I could,” Allocca told CNBC Make It.
The Chicago-based personal finance consultant and author of “Own Your Money” says this mindset has led to decisions he later regrets, like buying cheap clothes that don’t last, turning down trips and experiences he can afford, and taking public transportation when it would be safer to call an Uber.
“I started thinking that spending money was a bad thing,” she says. “I was avoiding expenses that were detrimental to my life.”
Her perspective has changed over time. Allocca, now 30, says she’s more focused on spending with purpose, or what she calls “buying less and buying better,” rather than cutting any costs.
She’s selective about where she spends her time, but she’s willing to splurge on things that make her daily life easier and more enjoyable, like high-quality mattresses and bedding. “You’re in bed every night, and if you don’t get a good night’s sleep, the rest of your day will suffer,” she says.
Another big-ticket purchase was her Breville espresso machine, which typically sells for about $700. “I really value my morning coffee. I love that ritual,” she says. I use it every day, so I don’t regret the price at all.
“There’s a big difference between frugal and cheap,” Allocca wrote in a recent LinkedIn post comparing frugal and cheap. “Frugality means spending money on things you value and cutting out things you don’t.”
how she lives frugally
Allocca also plans her life around an affordable routine: reading, cooking, and walking around Chicago. When we want to socialize, we often invite friends to the same activity.
“If I’m going for a walk, I invite a friend,” she says. “If I want to go out for coffee, I look at who’s around. Obviously it’s less expensive than going out[to a bar or restaurant]but you get the same emotional experience from it. There are so many ways to connect with people.”
Michela Allocca works from home.
Source: Michela Allocca
She takes a similar approach to her wardrobe. In her early 20s, Allocca said she bought “the cheapest version of everything,” following trends and stocking up on low-quality items that didn’t last. “Every year I found myself buying new clothes or feeling like I had nothing to wear,” she says.
Currently, she keeps a small, neutral-colored wardrobe built around high-quality essentials that she can mix and match, such as her recently purchased $238 pair of jeans that will last for years. “I care more about quality and how often I wear it than price,” she says.
healthy balance
Allocca says even healthy financial habits can be taken to extremes. Avoiding spending can feel rewarding, but it can easily turn into an all-or-nothing mindset.
“There are many similarities between dietary culture (and) consumption and spending,” she says, adding that focusing too much on restrictions can make it difficult to build long-term sustainable habits.
To avoid that trap, she budgets weekly and reviews her transactions regularly. This, she says, helps you stay conscious without becoming obsessive.
“When you write down your spending, you’re officially acknowledging the purchase,” she says. “You find out how much money you’re actually spending, and often it’s more than you thought.”
She still makes occasional spending mistakes, but she doesn’t see them as failures. “I’m a human being and exist in the same world as everyone else,” she says. “Sometimes you buy things that go against your rules and values, but that’s life.”
Her philosophy, she says, is to strive for progress, not perfection. “As long as you do the basics well and spend within your means, it’s okay to splurge once in a while.”
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