Recently, I read a fascinating comment from Sydney on SmartSpending (I added the bold myself):
I’ve never understood the unending supply of articles telling people to skip a cup of coffee or brown bag lunch just to save a few dollars. It helps, sure, but it won’t save you if you’ve made bad decisions on major expenses. I completely agree that if you plan carefully and take care of the big things – the long term major expenses in your budget – there’s far less need to sweat the small things. So many people buy a more expensive home than they can easily afford, cars they can’t afford, big expensive vacations or a houseful of new furniture they can live without. Even the choice of how many children to have and when has a huge impact on finances.
Yet if you arrange your life so that major expenses are not consuming all of your income and then some, you can actually eat lunch out once awhile, buy that cup of coffee, or see a movie. Quality of life goes up dramatically. At that point, if you want to save on little things also, it becomes a choice, rather than a constant necessity just to survive.
What struck me about the comment is that Sydney immediately ties events that involve spending excess money (“eat lunch out once awhile, buy that cup of coffee, or see a movie”) to quality of life. In other words, the ability to participate in a consumer economy is directly tied to quality of life in this quote.
I have no doubt that Sydney sincerely feels this way. I know that, for a very long time, I felt that way, too. I felt like my life was better if I had the freedom to go out to eat whenever I wanted, buy a video game whenever I wanted, or go out to a movie whenever I felt like it.
Today, I feel differently. While I might enjoy the experience, I no longer feel like a meal eaten out raises my quality of life at all. Instead, the things that bring what I would call “quality” into my life are experiences with my family. A quality experience is eating a homemade dinner with my children at the dining room table. A quality experience is a nap on a lazy Sunday afternoon curled up next to my wife. A quality experience is a picnic at the park or watching my son’s soccer practice.
I believe that tying quality of life to consumer purchases is a personal, conscious decision – one that often results in financial trouble. If you judge your quality of life by the things that you purchase, then you feel worse when you spend less and feel better when you spend more. This situation runs entirely contrary to healthy personal finance management.
A financially healthy mindset, in my opinion, derives quality of life from things that can’t be bought. The source of that quality can vary greatly from person to person, of course, but the real key is that your quality moments in life are wholly unconnected to spending money.
Not there yet? Look for the things in your life that fill you with joy that don’t involve spending money, then work on putting those things front and center. Once you find sources of quality that are separate from spending money, it becomes much easier to cut your spending drastically – and doing that can provide the foundation for a great future.