“Often our spending differs from our real values. We fritter away cash on things we don’t cherish and deny ourselves those things we do.” – Julia Cameron, The Artist’s Way
The Artist’s Way is a fantastic book about nurturing internal honesty and creativity that I recently found myself rereading, and when I stumbled onto the above quote, it stuck right in my head and I knew it would eventually turn into an article here because it just nails a fundamental truth about personal finance.
Cameron’s point is simple: spending money on things we don’t care about is a financial and personal misstep; denying ourselves things we do care about is also a financial and personal misstep. Both of those steps lead to misery, but in different ways.
The more obvious misery comes from self-denial. When there’s something that we cherish that we intentionally and frequently choose not to spend money on because we need it for other things, we quickly get a sense of feeling deprived and sad. This happens often to people who are just figuring out the ropes of financial responsibility. They make stiff financial cuts to their life and then discover that they’ve cut some things that are really dear to them and find themselves feeling miserable. Unless corrected, this usually leads to a complete abandonment of financial change and a return to one’s old habits – after all, even with financial pressure, it will still feel like a more joyous life.
However, a more subtle misery comes from spending money on things you don’t really care about. Spending extra money on things like name brand household supplies or on items bought solely to impress someone or on expensive but completely forgettable meals can really add up over time, and that’s money taken away both from achieving financial stability and from things you might otherwise truly cherish. Taking money away from financial stability adds a significant level of background stress to one’s life – that very financial stress is often the motivator for people to start making financial changes – and taking money away from things you truly care about can make one feel deprived, as noted above.
The optimal situation is where you’re spending money truly in line with your values – minimal spending on things you don’t cherish and adequate spending on things you do truly cherish. That can go out of balance in several ways, and all of those ways contribute to a sense of stress and unhappiness in life.
In my own life, I’ve found that achieving this kind of balance is like aiming for a target that I never quite reach, but happiness is found by getting close to it and consciously working toward it. You never quite reach it for very long because you’re constantly changing as a person, but aiming for that target and being close to that target is very life-affirming: you don’t feel (much) financial stress but you don’t feel overly deprived, either.
How do you go about it, then? There are a few key elements.
First, you have to “trust the process.” It takes time to achieve a balance of spending as little as possible on things you don’t cherish and spending adequate and reasonable money on things you do cherish. It’s a target you’re never going to perfectly hit, and you’re going to miss it widely sometimes, especially at first. It’s okay. Give it time. Trust that you’re going to eventually hone in on a much healthier balance, but that missing it, especially at first, doesn’t mean that the whole idea is bogus.
Second, you have to be a little introspective and really listen to yourself. The two things you really need to pay attention to are the sense that something you really care about is missing in your life and also the underlying stress that comes from financial insecurity and not achieving or making progress toward financial goals.
Those two feelings tend to work in opposition to each other. If you listen to one too much, the other one gets cranky and starts to act up. The feeling that tells you that something is missing tends to be louder and more obvious, but it’s a bit easier to work with. The feeling that your finances are in a shambles is less obvious but more corrosive, as it fills your life with a low but slowly rising level of stress. It doesn’t shout at you all at once – it just slowly makes things miserable.
Look for both. Listen for both. If one is loud and the other is quiet, it’s a sign that you’re out of balance and you should move slowly in the other direction. If you’re feeling deprived, then you should figure out ways to alleviate that feeling without just opening the floodgates on a spending spree. If you’re feeling the corrosiveness of financial stress, you should cut back on many things that aren’t obviously a key source of contentment in your life.
Third, you have to be willing to really consider whether you value something or not, and accept that you might not actually value some things as much as you thought you did. A huge part of this whole process is figuring out what you actually care about. That doesn’t mean what you think that you should care about. That doesn’t mean what you think others care about. That doesn’t mean what you cared about in the past and keep involved with even though your passion as faded. That doesn’t mean what pop culture is telling you that you should care about. All of those things are false signals. They’re the things that drain our money without any real return for us. They’re the source of that acidic financial misery and stress.
What you need to think about is whether or not you truly care about the things you’re spending money on now. Do that with every purchase, before you do it, as you’re doing it, and after you make it. Is this something that you really cherish? Or is it something that you think you ought to cherish but actually do not? Maybe you used to cherish it but you’ve changed or your life has changed. Maybe you feel social or cultural pressure to cherish it but you actually don’t. Pay attention to that. Don’t spend money on things you used to cherish but don’t any more. Don’t spend money on things that your friends or society or your culture tell you that you should cherish but aren’t highly meaningful for you. Use that litmus test for everything you buy beyond the basic essentials, and use it repeatedly (because you do change as a person).
Fourth, cut back on everything, but pay attention to which cuts actually hurt and be unafraid to roll them back. The strategy that works best for me is to say no to spending, then consider whether I’m really missing out on something I cherish later, and restore it if I do come to that realization. Yes, there are times when I skip out on something that I later decide is really important to me, but it’s far more frequent that I say no to something and then promptly forget about it. You’re far better off changing direction on 5% or 10% of your spending than overspending 90% of the time.
Finally, you have to be willing to see the benefits of responsible spending. Part of the reason that people err on the side of spending on things that they’re uncertain about is that they often don’t see the benefits of not doing so. It is very easy to lose track of the benefits of responsible spending because they’re not obvious at first glance, or they appear to be just a drop in the bucket.
The biggest non-obvious benefit of being very responsible with your spending is that you basically kill ongoing financial stress, which is corrosive to almost everything it touches. Financial stress is a kind of subtle background stress that ends up weighing in on all kinds of decisions in your life, making you feel subtly on edge and stressed out about things as simple as checking the mail or telling your partner about something cool you did today. Cutting down on financial stress (and eventually eliminating it) is an enormous life benefit, but it’s not an in-your-face benefit like the benefit of making a purchase in the moment is.
There’s also a sense of achievement and accomplishment and progress that comes from steadily paying off debts and steadily filling up your retirement savings. Step by step, the future doesn’t feel like a place for wishful thinking; rather, a bright future begins to feel inevitable. That’s incredibly powerful for your sense of well-being. That’s something worth cherishing on its own.
So, here are three things to think about.
First of all, the best financial life is one where you spend adequately on things you cherish and spend absolutely minimally on things you don’t. In a healthy life, this leaves you with a financial surplus, which you can then apply to something you’ll likely cherish in a less obvious way, which is paying off debts and improving your financial security.
Second, a big part of that balance is understanding what it is that you cherish and what you don’t. People often become unclear on this, particularly in the heat of the moment. Influences such as your past passions, your personal relationships, and the constant nudging of culture can make you feel like you cherish something for a short while, but it doesn’t last. Understanding what it is that you cherish now is important, and that takes some honest reflection.
Finally, this is an ongoing, imperfect process. There are times where you’re going to miss the target. That’s okay. When you feel like you’re missing out on something you cherish, listen to that. When you feel like you’ve overspent on something, listen to that. When you feel financial stress affecting your emotions or your relationships or your state of mind, definitely listen to that. You’re a marksman honing in on a very small target and what you’re hoping to do is get consistently close to it.