Spending More To Live Wisely

The most fundamental principle of personal finance is to spend less than you earn and do something worthwhile with the difference. This often nudges people toward spending less in every situation, but is that really the right move?

There are many situations where spending a little more in the short term results in much less spending and a higher quality of life in the long term. The key is to spend money wisely and consider the long term benefits. It’s all about being frugal and not being cheap.

Here are five examples of this phenomenon.

In this article

    Shop fresh and healthy

    It’s pretty clear at this point that the more fruits, vegetables, nuts, and whole grains you have in your diet, the better. At the same time, heavily processed foods are generally less healthy than minimally processed or unprocessed foods. In short, if you stick to the produce area at the grocery store, you’re doing the best you can for your long-term health.

    The problem, of course, is that many produce options are expensive. You can find a few bargains in the produce area, but if you get away from a handful of inexpensive plants, the costs can ratchet up significantly. However, this is a cost that’s well worth it.

    For starters, while it might feel like you’re spending a lot on produce, it’s usually just replacing other items that you’d also be spending a lot on. Processed foods aren’t cheap either, nor are most meats. In fact, depending on what you buy, the prices can end up being quite comparable. In fact, vegans and vegetarians — those most committed to a plant-based diet — spent an average of $23 less on food per week than those with a diet that included meat.

    And while your final grocery bill for a week’s worth of healthier meals might be higher than if you bought mostly processed stuff, it wouldn’t be substantially higher.

    In the long run, your health will improve if you’re consistent about a diet with more plants and more minimally processed or unprocessed foods than before. It might cost a bit more today, but it’ll save you tons over the long haul. Spending money on healthy foods is a wise choice.

    Maintain your stuff, especially your home and car

    Maintaining things can be a hassle. It usually involves little expenses and a little time, with tasks such as buying some small tool for the home or making an appointment somewhere.

    However, maintaining your stuff significantly expands the number of useful years you’ll get out of the item. If maintenance adds several years to the time you get out of an expensive appliance or your car or some part of your home, it ends up being a huge cost-saver.

    A good approach is to start a home and auto maintenance checklist. Stick those things on your calendar at the appropriate times and just take care of them when they pop up. Sure, you’ll have some little expenses and little chores along the way, but if it means many more years of reliable cars and appliances, it’s well worth it.

    Buy reliable things

    Paying more for a reliable version of an item you use frequently will pay off in the long run. This is especially true if you intend to use it through its normal lifespan and you’re willing to invest a little time and money along the way to maintain it.

    A good way to check for reliability is to check reviews in an unbiased publication like Consumer Reports. Put a high priority on reliability and a little less emphasis on bells and whistles that you probably won’t use.

    This is true for things like large appliances, but it’s particularly true for your car. Buying a reliable car and driving it until it’s truly worn out (and following the maintenance schedule closely as you go) is the best way to get the most value out of it.

    Of course, this is expensive in the short term. The reliable item usually has a higher sticker price. However, if it lasts for a lot longer, the cost per year of ownership will likely end up being lower. Furthermore, it’ll be much less of a headache because you simply don’t have to worry about it. It’ll just work.

    Save (genuine) time

    One big reason people spend money is convenience. We all need more time, but the question is what you’re doing with that saved time.

    Rather than just buying convenience items because they’re convenient, think about what you’re actually going to do with that time that you save. If you spend a little more to buy pre-chopped onions for a recipe, what will you do with the 10 minutes you save? Will you do something genuinely worthwhile, or will you flip through social media posts?

    If you’re paying more for convenience items to save time, then doing nothing deeply valuable with that time, you’re not getting ahead.

    On the other hand, if you buy a convenience item and then use that time in a deeply valuable way, such as doing something meaningful with your child that you would not have done otherwise or working extra on a project that’s personally important to you, then it’s worth it to spend a little more for convenience.

    Buy in bulk

    The sticker price of bulk items is always higher than small packages. The bulk package of toilet paper is huge, for example, as is the sticker price. If you buy in bulk, you’ll absolutely walk out of the store with a bigger grocery bill than if you bought smaller packages. However, bulk buying has two enormous advantages.

    First, the price per unit is often quite a bit lower. You might buy six rolls of toilet paper for $3 or buy 36 rolls of toilet paper for $12. The cost per roll in the $3 package is $0.50, but in the larger package, the cost per roll is only $0.33. That adds up, though you need to check the prices to make sure.

    Second, it saves time, because you don’t have to even think about buying toilet paper for a long while. It’s an errand that becomes far less frequent. You’re less likely to have to make a run to the store to get toilet paper, which also saves money.

    Buying in bulk is a great trick for keeping spending down over the long run because it’s not only cost-efficient over the long run, but it keeps you out of stores where temptation can strike.

    Spending more to live less

    Of course, life affords people many opportunities to spend money foolishly. Here are five instances where spending more results in less value and joy.

    1. Trading cars frequently. Most of the expense of a car is bottled up in the transaction itself, particularly new ones since they depreciate so rapidly. The best way to get value out of a car is to buy a reliable low mileage one, drive it as long as possible, and maintain it well along the way.
    2. Buying “cheap” versions of things you rely on. While you might feel like you’re saving money up front, when you buy the low-end version of something you rely on, it’s likely to fail much sooner than other options and also not function well while you’re using it.
    3. Buying things you don’t use or frequently appreciate. If you’ve already got a bunch of some item and most of them are stowed away on shelves or in closets, buying another one isn’t a good call.
    4. Spending money on forgettable things. Go through your credit card and bank statements from the past few months. How many of the nonessential expenses do you actually remember? How many of them still feel worthwhile? Don’t lie to yourself! If an expense isn’t remembered or doesn’t leave you feeling happy, it’s OK. It’s useful feedback. The expenses that you don’t remember and aren’t still happy with are ones you can strongly trim going forward. This is an exercise in separating wants from needs.
    5. Keeping up appearances. It’s a natural human fallacy to think that people notice us a lot more than they actually do. In fact, it’s got a name — the “spotlight effect.” Don’t spend money to impress other people, because you simply won’t get value in return for that spending. If you want to impress, impress with character, as that kind of impression is free and positive.

    We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

    Trent Hamm

    Founder & Columnist

    Trent Hamm founded The Simple Dollar in 2006 and still writes a daily column on personal finance. He’s the author of three books published by Simon & Schuster and Financial Times Press, has contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and his financial advice has been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.