The S.H.R.E.W.D. Approach to Spending


Looking to trim your spending, or at least spend more mindfully? Try S.H.R.E.W.D. spending.

"S" is for Shift. Consider redirecting your spending from one item to another based on your values and goals. For example, you could cut down on home décor spending and utilize that money to save or invest in your child's education.

"H" is for Halt. Stop spending on non-necessities that add little or no lasting value to your life.

"R" is for Restructure. Try reconfiguring the mechanics of some of your spending. For example, you should generally use savings to pay down debt if the interest rate you're paying on the debt is higher than the return you're getting on savings. Be sure to keep enough money in an emergency fund to cover basic living expenses for at least three to six months. Another way to restructure your spending is to use a Flexible Spending Account (FSA) to reimburse yourself for health care or dependent care expenses. The tax savings from contributing to an FSA will effectively lower the cost of the expenses you pay for through the account.

"E" is for Exchange. Switch to less expensive choices when feasible. Consider buying generic versions of products instead of more expensive brand-name versions. You might save on energy costs by turning in your old fridge for a new, more energy-efficient model.

"W" is for Wait. Defer spending on certain "wants." How about holding off on buying that new car until after you've built the emergency fund you need?

"D" is for Decrease. Reduce your spending to improve your net worth and cash flow and to fund future goals.

Taking the S.H.R.E.W.D. approach to spending is one way to develop a more positive and productive relationship with money.

February webinar
To learn more, join EY's February webinar "Achieving Financial Success: Why You Might Be Your Own Worst Enemy," on February 21, 2019. Click on the links below to register for the 11:00 a.m. ET session or 4:00 p.m. ET.

For more information or financial assistance, actively-contributing members of the Annuity Plan can call an EY financial planner at 1.877.927.1047.

This article is used with permission of Ernst & Young LLP.