Every few months, I like to go through all of my spending for a month, tabulate how every single dollar was spent, sort and group all of that spending in various ways, and look at the results.
How much did I spend on food? How much did I spend on particular types of food? How much did I spend on craft beer? How much did I spend on coffee? How much did I spend on writing supplies? How much did I spend on books? How much did I spend on board games?
It takes some time, but going through all of those questions – and many more – is worth it.
Every single time, I find that I’m disappointed in how I’ve spent some of our money.
I’ll compare how much I spent on books, for example, to how much I put aside for retirement. I’ll compare how much I spent on craft beer to how much I spent on nutritious foods. I’ll compare how much I spent on board games to how much I put aside for a long-planned family activity.
And I’m disappointed.
Time and time again, I chose a short-term poorly considered impulse over a better long-term option. I spend money on things that are practically forgotten within a day or two, and that money was essentially taken out of the hands of an option that would make my life better down the road. Is it really worth stripping money out of my retirement savings or my car fund if I literally have no memory of that expense at all in two or three days?
Even worse, the short-term choices I made were often not even good in the short term, either. I have no problem with making short-term spending decisions provided that they really add something of value to my life. That purchase should bring me to an experience that I couldn’t get any other way or provide more value in my life than the money I spent.
So, when I look at those spending choices, isn’t it just a big cesspool of negativity? No, it isn’t. It’s actually the opposite of that.
First of all, that initial wave of disappointment isn’t borne out of a sense that I’m a horribly flawed person who can’t do anything right. I know that I do quite a few things right with my money. I’m in my thirties and own a house with zero debt – that includes zero mortgage and zero student loans. My wife and I have so much put aside for retirement that unless something truly disastrous happens, we’ll probably retire shortly after our oldest child leaves the nest. I have made a lot of very good financial choices.
Instead, that disappointment comes from knowing that I can do better. I am not perfect with my money and I make mistakes, but those mistakes are fixable. They are mistakes that I don’t have to repeat in the future. I can always make better choices going forward than I made in the past. Understanding that adds a healthy dose of optimism to that disappointment, often completely covering up that disappointment.
Another part of the equation is that I don’t think that short-term choices are always wrong. Often, it looks like I decry any sort of short-term choice in my life, that I’m not spontaneous at all, and that if something is just purely fun or enjoyable in the moment, I don’t value it. None of that is true.
My criticism of short-term choices is that, in the moment when I’m considering doing something spontaneous, I’m looking almost entirely at the short term and nothing more. The long term impact of that choice isn’t even on my radar. I’m thinking solely about exchanging something I have for something I want right now.
Even worse, I’m often not considering other short-term alternatives. A great example comes with buying books. When I think about buying a book, I’m often not actively considering whether I could get that book from the library or borrow it from a friend or hunt around for a better bargain. Instead, I’m seeing this book that I want, paired with the realization that I can actually afford to buy it right now without a major short-term negative consequence.
The worst part, though, is when I don’t see my real values shining through with that spending. With purchases like books, I can at least see some long-term values peeking through in that expense. I value learning and knowledge. I value the process of actually reading. You can get that from a purchased book, even if there might be a better way of doing it.
What I’m frustrated most by are expenses where I can’t see my real values showing through, when I’m so caught up in the short-term thinking that I don’t even see the fact that there’s almost nothing in this for me in terms of my broader life.
Junk food is a perfect example here. The prospect of buying and consuming a sugary beverage or a pint of beer or a big mouthful of potato chips is almost purely a short term choice. It tastes good in that moment. That’s about it.
The problem with those choices is that it provides almost nothing for the long term in my life. I’m not a beer connoisseur who gets some long-term value out of making a beer-tasting video or writing a review or simply improving my palate. Instead, that beer tastes good for a few minutes and then disappears. All it does after that is raise my credit card bill and also add some calories to my diet which appears right around my midsection as a contribution to a beer belly, which adds to long-term health costs.
The only time where it adds some value is when it contributes to a social occasion where I’m building a long-term relationship with some friends. Sharing a beer with old friends and new friends, for me, is about that relationship. That’s the long-term value, there. My only concern with that is whether the beer is really necessary in building that relationship, which is why I often order a club soda or something like that when I’m at a bar. I can still hang out with and build relationships with friends – which is the part that I value – but without the long-term costs of the beer.
That’s basically my rule in terms of eating junk food. I’ll do it if it’s called for in the social situation I’m in, meaning I’ll eat something unhealthy served by a friend or I’ll share a beer with a friend. But when I’m on my own, that social value from consuming expensive and unhealthy food is basically gone, so I don’t bother. If a friend puts Doritos out on the table at a potluck dinner, I’ll grab a few; when I’m eating alone, I’ll just eat something inexpensive and healthy because I value long-term health and I value long-term cost savings.
What about the pleasures of life, though? That’s the question that many people ask when they go through this kind of thinking process. Doesn’t this kind of perspective eliminate a lot of simple pleasures in life? Things like the taste of a cookie or the feeling of buying a new hobby item are deeply enjoyable, aren’t they?
They are, absolutely. The thing is, there are almost infinite things in life that provide pleasure. I get a lot of pleasure from feeling the warmth of the sun on my skin when I take a walk. I get a lot of pleasure from making people laugh at a good joke. I get a lot of pleasure from solving a puzzle or integrating a new idea or perspective into my thinking. I get a lot of pleasure from standing on top of a tall hill that I’ve climbed, where I’m a bit out of breath but I can see an amazing view all around me. I find tons of pleasure in how I spend the resources of my life. Simply choosing to skip over a few short term pleasures because they don’t reflect broader values that I hold true does not mean a life deprived of pleasure.
Here’s the thing, though: ideally, I want every dime I spend and every block of time I spend to somehow reflect the big values I hold true in my life. I’m not perfect at this – no one is – but I know that I can get closer and closer to that goal when I reflect on my choices and try to do better in the future.
The first step in that process, of course, is clearly identifying what you value, particularly in the long term. What really matters to you? What are the foundations of a truly good life, in your eyes? What governs the best choices you make in life?
I value strong family ties. I value being a good parent and a good husband. I value strong friendships, preferring a small number of strong friends to a larger network of weaker friendships. I value learning and education. I value making things – food, writing, art, and so on. I value introspection. I value solving problems and the pleasure that comes in doing so. I value good health. I value humor and a quick wit. I value independence and self-reliance. At the same time, I value making sure that my community has some kind of a safety net, and I value stretching that safety net as wide as I can make it, so that people who fall for reasons outside of their control don’t crash. I value spiritual growth. I value communities.
You probably value some of those things, too, while others don’t really ring that true to you. You likely have other things that you deeply value as well.
Once you have a good bead on the things that you really value, reflect on how you spend your money (and time and focus and energy and social capital…) with regards to those values. How much of your time and money and energy are you spending each day that are right in line with those values? How much of your money and time and energy are you spending each day that isn’t in line with those values?
This isn’t always going to be a black-and-white categorization. There’s a lot of grey area here. The value is in recognizing what things you do are pretty strongly in line with your big values and what things are barely in line with your big values.
You’re going to be imperfect. That’s okay. You’re going to realize that you spend quite a lot of your money and time and energy on things that really aren’t fully in line with your big values, and that’s not a source of despair. It’s simply a recognition that you’re human.
I make mistakes like that all the time. So do you. We’re humans. It’s part of being human.
The value in thinking like this isn’t to beat yourself up. The value in this kind of thinking is to see areas where you could do better. It’s not to subscribe to perfection and beat yourself up when you don’t reach it. It’s to move a step or two in a direction where your daily choices line up perfectly well with your big values in life.
When you go through such reflection, it’s completely normal to decide that most things don’t really merit a change. What you’re really looking for are the two or three things that you could do better without really losing anything in the process – and those things always exist.
Take my book buying, for example. Quite often, I’ll reflect on it and decide that, all things considered, it really wasn’t a bad move. However, once in a while, I’ll recognize that I made a bad short term call and that I should have just checked that book out from the library.
Over time, some good “rules” emerge from this kind of thinking. You’ll start recognizing more sensible patterns to follow in terms of when it makes sense to spend money and time and when it doesn’t. For example, I often don’t buy novels any more unless I am dead sure I’m going to read and re-read them. If I haven’t read a novel, it’s almost always a mistake to buy it unless I’m literally spending pennies on it. However, novels that I’ve read two or three times and I know I’ll read again, like an old favorite, are ones worth buying. For example, George R. R. Martin’s A Song of Ice and Fire novels fall into that group, and I’m suspecting that James S. A. Corey’s Expanse series will get there, too, since I’ve reread the first few novels in that series quite a few times.
Ideally, reflecting on those new “rules” retrains your instincts a little. I find that I no longer instinctively pick up novels I’m interested in (for the purpose of buying them) when I’m in the bookstore unless it’s something I’ve already read. If I do pick up a new novel, my instinct is to go request it at the library, because I know that the value of a novel in that first read-through is in the experience of actually reading it. Owning it only becomes valuable when I know there’s a strong chance I’ll return to it for a re-read in the future.
Over time, I’ve trained a lot of my short term desires in that way. I rarely buy beer any more unless there’s a social component to it, and in that case I’ll usually try something new to me so I can figure out if I want to make it or something like it myself; if I drink beer at home, I usually pull out some of my home-brew to share, and I don’t drink alone. Those are instincts that have been crafted over time through many social and beer-drinking situations, leading me to figure out what really works in terms of balancing my short-term and long-term desires. It’s instinct at this point – I don’t even think about it in terms of those rules. My mind just does it automatically when I’m in such a situation.
Remember, this isn’t just a one way street where you cut spending on things you don’t value; there’s nothing wrong with contributing more to the things you do value. For example, I value making things and I value my personal health, so I don’t mind buying things that make it much easier for me to make healthy foods I like at home. I now have an earthenware crock for making medium-sized batches of fermented and pickled foods at home – they’re low-calorie and tasty and great for your digestive system. This allows me to make my own pickles and sauerkraut, and I pretty much constantly have a batch in that crock. It was expensive, sure, but it felt like an item that was very, very much in line with what I value.
I value communities and solving problems and introspection, so I’ve slowly been devoting more of my time to getting involved with community projects and civic groups and, ever so slowly, into community governance. I’ve donated money to a bunch of different community projects because I can see the benefit that it provides to the community as a whole. I especially value the local food pantry, because that also falls in line with my long term value of helping people out when they fall, so I actively support it. The best part? I feel really, really good when I do these things. It’s not because I think they’re “right,” but because it feels really, really good to do things that are strongly in alignment with what you value.
A long time ago, I wrote an article about the shallows and the deep, in which I argued on behalf of cutting back on the things you don’t care about so that you can easily dive into the things you do care about. That’s what this type of reflection is really all about; when you become more and more clear on what you personally value, it becomes easier and easier to spend your money and time and energy on things that are in line with those values and it becomes easier and easier to not spend your money and time and energy on things that aren’t in line with those values.
As long as at least some of those values orient themselves toward long-term financial security, this whole process is going to inherently nudge you toward better personal finance decisions. Ever so slowly, with one or two little changes at a time, you’re going to start making short-term instinctive decisions that have a better long-term payoff. Those choices are going to seem completely natural, but they’re going to sacrifice short-term benefits that you don’t really care about in exchange for long-term benefits that you do care about.
You’ll say “no” to buying silly unimportant things, and say “yes” to bumping up your retirement savings.
You’ll say “no” to buying more and more hobby supplies that you’re not using, and say “yes” to buying high quality reliable “buy it for life” versions of things you actually use regularly.
You’ll say “no” to experiences that are completely forgettable and say “yes” with an open heart to the ones that are really meaningful.
Best of all, you’ll do it in such a natural way that you’ll wonder why you never made decisions like that to begin with.
That’s when you know you’re really on the road to the future that you want.