Balancing Spending, Saving, and Social Situations

Each year, I go to Gencon (a convention in Indianapolis held every August) with a fairy large and ever-shifting group of guys ranging in age from early twenties and still in college to mid-forties and in full career mode. Some are married with children, while others are married without kids and still others are single. I’ve known most of these guys for years, some of them for decades.

During the travel and the periods in hotel rooms when we’re not actively at the convention, we would have a lot of life conversations of the type you would expect from people who have known each other for many years. We caught up on how our lives were going and how our careers were going, among countless other topics.

Naturally, as you would expect with any sufficiently large groups, there were people at many different points in their financial lives. A few of us had achieved debt freedom, while others were facing down a lot of debt. Some of us were stockpiling for retirement, while others hadn’t put away a cent yet.

Yet every single one of us struggled with that age old question of balancing saving and spending.

Gencon provides a great avenue for thinking about questions like this. For the people who would attend such a convention – in other words, people who enjoy tabletop games of all kinds – it can provide an endless temptation to spend money. The exhibitors at that convention offer all kinds of temptations – some of them hawking the latest releases, others selling handmade and one-of-a-kind items, and still others pushing discounts. On top of that, there’s an auction house constantly selling all kinds of items, plus you’ll also find many “sub-events” that require a paid admission.

If you go to a convention like this as an active fan, you need some self control or you can wind up spending far too much. If I just spent without any control, I could easily spend thousands here. (Thankfully, I do have some control.)

The group I go with exhibits a bunch of different philosophies in this regard.

For example, I typically save for months for Gencon, socking away some money each week to pay for the convention. That money constitutes my spending at the convention on whatever I choose. (My plan for 2015 is a bit different, but that’s a good topic for a different post… check back tomorrow for that one.) I don’t regret this spending in the least because it’s completely planned for and doesn’t really adversely affect any of my other goals.

One of my friends is very frugal and rarely spends anything. He usually intends to buy a couple specific items while there and that’s all he buys. He and his wife are very focused on long-term goals, so they don’t really spend money without a lot of careful consideration.

Another friend intentionally travels by air so that there’s very little space for him to purchase anything, though he tends to splurge on the more experience-oriented items. His philosophy is that he’s building a long-term career and that he’ll be able to splurge more later on.

Yet another friend just lets down his guard completely at Gencon. He spent several hundred dollars on a single item in the auction house. He is somewhat selective in what he buys, but if he finds the right item, he will happily open up his wallet to acquire it.

Yet, surprisingly enough, these results don’t directly correlate to the financial success of the individual.

Some of the people who behave frugally actually do so to achieve financial goals. The short term desires at the convention simply don’t scratch the surface of their focus on their long term goals, regardless of the influence of others.

Others behave frugally because they don’t earn enough to spend. Even if their friends are tempting them to spend, they can’t. They simply don’t have the money.

Some who spend a lot do so because they’ve carefully planned for it. They put away $5 or $10 a week all year long so that they can buy things without worry when the time comes around. They sacrifice little treats for months so that they can enjoy a few big treats later. Those treats may or may not be influenced by the people around them, of course, but it’s okay because they’ve put their financial goals first.

The dangerous group is the last one – the people who can afford to spend and do so purely on the spur of the moment. Without some real care and understanding of their finances, they can get into a lot of trouble. It’s those ultra short term desires that immediately translate into purchases that can dig a big hole.

So, what’s the point? There are several points, really.

First, you can’t judge a book by its cover. The person spending a ton might be the poorest person there… or they might be the richest. The person buying nothing might not have any money to spend… or they might be extra prudent with their money. The appearance has little or no connection with the financial reality.

Try applying that idea to your own life. Just because you might be in a position to spend and your friends might be spending doesn’t mean you have to… and choosing not to doesn’t mean that you couldn’t spend.

Second, friends really don’t care too much what others are spending. I hang out with the aforementioned people because I like their company, not because they’re buying stuff or have a lot of cool things. I ogled the expensive item that my friend bought at the auction house, but I was honestly more happy for him than anything else. He was giddy with finding this item he had searched for over the course of many years and I was happy for him (even though I probably would have enjoyed it myself).

That’s really the key of the whole matter. When your friends spend, that doesn’t mean that you should, too. You can make up your own mind about it and, if your friendship is worthwhile, it won’t really matter. At the same time, be happy for your friends when they get something that lifts their spirits, not jealous of the item itself. Respond with expressing joy at their happiness and that the item is useful to them personally, not with jealousy or negativity because you secretly want it. You can make up your own mind as to whether a particular purchase is “worth it” for you.

Don’t convince yourself to be excited about the item that your friend is excited about. Be happy for your friend that he or she has found happiness, but that doesn’t mean you’re suddenly in love with the item in question.

Similarly, your goals are your own. The words and actions of your friends should have little or no impact in that area unless you’re asking them for help. Don’t waste a second worrying about what other people think of your goals unless you’re asking them for input.

This leads to the fourth item – and this is a big one. Friends can be a valuable support for the things you’re trying to achieve – but only if they’re good friends. A friend that matters offers criticism when you ask for it, but looks for the positives when you don’t. A good friend is happy for you if you make a spending choice because they know you’re doing what’s best for you. A good friend won’t encourage you to spend unnecessarily, either.

In the end, the desire to overspend in a social situation comes down to internal issues, not external ones. Spending more – or spending less – won’t make you more or less accepted by the genuine friends that actually matter – and the truth is that they’ll likely notice far less than you think either way (that’s the spotlight effect popping up again). If a person does make you feel guilty about what you’ve spent or not spent (provided that you’re not directly impacting their life with your spending choice by, say, booking an ultra-cheap hotel they’re sharing or something like that), then they’re not being a friend at all.

Instead of spending even a second worrying about what others might think about your spending, instead focus on you. Do you need this item? Do you really even want this item or is the hype and hullabaloo distracting you? Can you afford this item without messing with your other goals? Those are the real questions to ask and they have little to do with the people around you.

Your decision to spend in almost every situation is yours and yours alone. If a friend is urging you to spend or putting you in situations where you might spend more than you’re comfortable with or is encouraging a spending “arms race,” talk to that friend. A true friend will understand and help. As for everyone else – the “friends” that would sink you and the strangers on the street?

Ignore ’em. They don’t matter when it comes to your goals.

Good luck.