The Mythology of Spending and Mental Anchors

I have a quick four question quiz for you to run through in your head. Just give your snap response to these – don’t think about each one too much.

What is a wedding supposed to cost?
What is an automobile supposed to cost?
What is a home supposed to cost?
What is a three week vacation for a family of four supposed to cost?

For each of these questions, you came up with a number of some sort. That number is based on your own life experience coupled with what you’ve observed others doing and also the influence that media has had on you. That number, in other words, is your “mental anchor” for what that item should cost – and it’s often the basis of judging whether something is reasonable in price or not.

Of course, anyone who has read The Simple Dollar for long probably recognizes one thing immediately: that anchor price is nothing more than a sticker on the box. It doesn’t represent what you’d ever actually need to or have to pay.

I’ll show you what I mean.

According to, the average American couple spends $20,398 on their wedding, and that’s not too far from the mental anchor of the cost of a wedding averaged across all economic levels.

The problem, of course, appears when people begin to truly use the $20,000 figure as a mental anchor for their wedding. “We have to spend that much in order to have even an ‘average’ wedding?” people ask themselves. Then, in order to have their day be ‘special’ or ‘exceptional,’ they spend an amount that’s far over the top, putting them into debt for quite a while.

I’ve witnessed at least two couples do this with their wedding – they invent a mental anchor of what it should cost, chase that mental anchor, and wind up with a gratuitously expensive wedding that ceases to actually make either the bride or groom all that happy in the end.

That same experience repeats itself with cars. After all, there are an awful lot of people out there buying new luxury cars, aren’t there? They have an anchor in their head of what the average is and they must beat that average.

Here’s a novel idea. Forget what your mind is telling you about what things should cost.

Instead, figure out what you actually need (or want) and then strive to minimize the price on that.

So, for example, if you’re thinking of getting married, simply sit down and make a list describing what your wedding will be like. Revise it a bit and make sure both of you are happy with the list. From there, find the best deals you can on each item on the list.

Voila! You’ve created a wedding you’re both happy with and you’re not comparing it to the idea of what a wedding (or wedding cost) should be. Why? Because it doesn’t matter what a wedding “should” cost. It only matters what your wedding costs, and you should strive to maximize the value of your dollar while having the wedding you both want.

The value of something isn’t expressed in dollars. Everything has a cost, but that doesn’t represent the value at all. The value is what you get out of it. Does it make you happy? Does it meet your needs? Those are the things that matter, not matching what someone else is doing.

If you spend all of your time comparing the major things in your life to others based on their cost or their perceived value, you’re saying that what others want is more important to you than what you want. Never let any important choice in your life be governed by what others want.

This is your life. Live it the way you want. Ignore what everyone else says you must have and says you must spend on it. This is about you, not them.

Trent Hamm
Trent Hamm
Founder of The Simple Dollar

Trent Hamm founded The Simple Dollar in 2006 after developing innovative financial strategies to get out of debt. Since then, he’s written three books (published by Simon & Schuster and Financial Times Press), contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.

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