A friend of mine recently told me that my “guilt” from spending money was completely backwards.
Let’s say I’m going to a coffee shop, for example. My tendency would be to not go there at all and just drink something at home, but if I were to go, I’d pick out a cup of something tasty and probably enjoy it as I was drinking it, but afterwards, I’d usually feel like that was a complete waste of my money. The only thing that might change that is if it were part of hanging out with a friend I hadn’t seen in ages, or some other extenuating special circumstance.
On a typical day, something like buying an expensive latte from a coffee shop would leave me feeling guilty about how I was spending my money.
On the other hand, let’s say there’s something expensive I’ve been thinking about buying for a while, something that I’ve thought about a lot and researched, something that I know is going to bring me lasting enjoyment. Maybe it’s a $1,000 piece of homebrewing equipment, or maybe it’s an amazing vacation with my wife that we’ve talked about for years.
Whatever it is, I really don’t feel guilty at all about that purchase, even though it’s incredibly expensive. If it’s something that I’ve thought about a lot, made sure I could afford, researched appropriately, and realized that I would get lasting joy and pleasure from it, I don’t feel guilty at all about that purchase.
It turns out that at least one of my friends feels the exact opposite of this. Buying something like a latte at the coffee shop each day or a meal out for lunch doesn’t even hit her radar screen at all. She doesn’t feel guilty at all for those things. On the other hand, she frets and worries extensively about any big purchases, both before and after.
While I can’t exactly explain what motivates my friend’s relative sense of guilt, I have a pretty good idea of why I feel the way I do.
First of all, spending money on something that’s fleeting usually feels like an enormous waste of money to me. If I’m alone, I’m usually happiest when I’m minimizing my spending on anything consumable because, honestly, it really doesn’t matter that much. Buying something that’s fleeting and forgettable when I’m alone just feels like I might as well have thrown the money out of the car window. Whenever I do it, I feel as though it was a mistake because it directly costs me in terms of other aspects of my life. The fact that it may have been a small amount is pretty inconsequential to me.
This is why I’m so focused on trying and buying store brands – I want to spend less on those forgettable everyday essentials because they’re so fleeting and so unimportant to my day-to-day happiness. Buying a jug of Tide doesn’t make my life better.
This extends to my immediate family as well, though not as intensely. I’d far rather, for example, pack a convenient meal for our family’s road trip before we leave – because it’s quite a bit cheaper – than stop somewhere along the way, and I feel like such a stop is really a waste of money. I’d far rather eat a meal at home with them than eat out, so that on the rare occasions that we do eat out, it becomes something more special.
So, when do I consider those little forgettable expenses worthwhile? They matter when they’re a key part of building or maintaining a relationship I care about, like going out to eat with a friend who’s only in town for a very short while or going out to lunch with a potential business partner.
I also don’t “cheap out” when I have guests in my home. Why? In those situations, the expense isn’t about the item at hand, it’s about the relationship. Relationships have real lasting value for me and I don’t mind spending money in situations and on little things that might help maintain and improve those relationships.
Now, what about the big things? How can I justify spending $1,000 on a piece of homebrewing equipment (note that this is a hypothetical example) when I won’t spend $5 on a cup of coffee?
First of all, those big things are the things I really do care about. They’re tied deeply to something that really matters to me – a deep personal interest, a close relationship, or something like that. Most of those little fleeting purchases simply do not matter to me in any lasting way.
Second, I don’t make a big purchase without being completely sure that it fits into our current family budget. I’ll usually save for this big purchase for months, usually by taking money out of my monthly line in the budget for spending on whatever I so choose. That way, the $1,000 or whatever I’ve saved up isn’t actually impacting our budget in any way.
Third, I’ve thought about the purchase a lot and feel quite confident about it. During the period when I’m saving up for that big purchase, I’ll research what I want to spend that money on and think a lot about whether I want to actually spend that money. If I actually finish this period and still have a strong desire for that item, I’m pretty sure that it’s going to be a good choice.
None of those things are true for little incidental purchases. They’re usually things that I don’t care about, I’m often not sure if they fit well into the budget, and I haven’t given it much consideration at all. Just because the expense happens to be relatively small doesn’t mean that I should ignore these factors.
To put it another way, my guilt about a purchase has little do to with the size or expense of the purchase. It has to do with whether the purchase is actually meaningful for me in a lasting way, whether we’ve accounted for it in our budget, and whether I’ve given it at least a little consideration as to whether I really want it or not. If those things aren’t true and I’m still spending money, I’m going to feel guilty about that expense.
On the other hand, my friend’s guilt about a purchase is heavily tied to the size of the purchase. She rarely feels guilty about small purchases, but often feels guilty about larger ones.
Which one is right? Obviously, I prefer my own outlook or else I wouldn’t live my life in that fashion, but that doesn’t mean that it’s the right choice for everyone.
I tend to think the philosophy of worrying more about larger purchases works just fine under the right circumstances. For example, if that person is automating most of their finances and already has their bills and their retirement savings covered, not worrying as much about little pieces and worrying about big ones can actually make a lot of sense. If you have, say, $1,000 in flexible spending over the course of a month or two, a $500 purchase is going to make a much bigger impact in that pool of money than a $5 purchase.
Similarly, I think the philosophy of worrying about less meaningful purchases makes sense in many circumstances, too. If a person is highly organized when it comes to their finances and knows where every dollar goes, being more worried about the actual purpose and long-term benefit of each dollar actually makes a ton of sense. In other words, worrying less about purchases that are more meaningful actually lines up well with how I handle my money.
More important than either of these things, however, is that you do have some sense of “guilt” or some sort of negative reaction to spending mistakes.
Spending without any limits at all is going to put you in financial trouble. You need to have some sort of internal guide that tells you that spending too much money is a bad thing and that feeling should grow stronger the more you spend and the tighter you make your finances because of that spending.
Perhaps you’re like me and that internal guide or sense of guilt comes from purchases with little lasting meaning. Maybe you’re like my friend and that sense of guilt comes from expensive purchases. In either case, our mind is alerting us to the fact that we might be making a mistake here and that we should rethink what we’re doing.
Trust that sense of guilt. Listen to it. Figure out what it’s trying to tell you. Usually, it’s trying to tell you something useful, something that indicates that maybe you should be making some different choices because the value you’re getting from your current choices isn’t adding up to enough.
There’s nothing wrong with spending money to have fun, but when you’re spending money in a way that’s leaving you feeling guilty, then it’s not adding up to nearly as much fun. Pay attention to that and make some changes. If you do, your life will be far better off for it.