One money strategy I’ve used since the very first day of my financial turnaround is to carefully consider all of my purchases. I try to avoid buying things unless I’ve given that purchase some serious thought, especially expensive items, but even most inexpensive ones.
While this works extremely well for me in a bubble where my relationships with others are secure and I’m concerned mostly with my financial future and my family’s stability, it’s not exactly a good strategy in other respects.
For starters, using that approach in social situations with every little purchase can indicate to others that you’re a complete cheapskate, which can damage relationships because people interpret that “cheap” behavior as personal disrespect when none is intended. While I do advocate for not worrying what other people think, blatantly displaying character traits that others would think of as negative is not something you generally want to be doing.
This is particularly true when your behaviors have an impact on others. Many people don’t like bad body odor or bad breath, for example, so even though you might not care what other people think, basic hygiene standards are still important. In a nutshell, you should treat other people as you would like to be treated, and that does mean thinking of others in many of the ways you act in public. What you shouldn’t worry about is what other people think of your choices in ways that don’t impact their lives, but being a cheapskate can definitely impact the lives of the people you associate with.
For example, let’s say that I’m hypothetically going out to dinner with an old friend or Sarah and I are going out with a couple that we want to build a friendship with. While I’m not going to spend like I’m crazy, I’m certainly not going to inspect the menu for the absolute cheapest options, order water, refuse to share a bottle of wine, or anything like that.
Let’s say that I was going out on a date (hypothetically… I haven’t been on a date with anyone other than my wife in more than twenty years). I probably wouldn’t want to sit there counting pennies if we went out to eat or went to a movie. I’d also not be doing myself any favors if I sat there judging my date for choosing to order a side salad or a cup of tea instead of free water.
Let’s say that I have friends over for a dinner party. While I’m not going to drop hundreds of dollars on gourmet foods for everyone, I’m also not going to serve them instant ramen or peanut butter sandwiches, items that I might otherwise occasionally eat for lunch if I’m going solo or with my family.
There are even some non-social situations where you cost yourself by overly considering purchases. Let’s say I’m at a yard sale and I come across an item that I know I can flip for ten times the value, but it far exceeds what I intended to spend at yard sales this time. It would be silly of me to pass it up.
The reality is that sometimes “carefully considering purchases” isn’t the best strategy. Social situations are often an example of this, but so are situations where a truly exceptional bargain falls on your lap (and I’m not talking about a sale at Kohl’s here) or some other outsized opportunity.
Here are some principles I use to figure out the specific situations where “carefully considering purchases” can backfire on me and when I should loosen the purse strings a little.
I don’t worry about spending during out of the ordinary social situations. If I’m seeing a friend I haven’t seen for a long time or I’m trying hard to build a strong relationship with someone, I don’t really worry about the expense. To me, bonding that relationship takes priority over relatively small expenses. I’ll go out to dinner with an old friend and I really won’t worry about the cost of it, because the expense there isn’t the meal. It’s an investment in the relationship.
“Out of the ordinary” situations are ones that are unlikely to repeat in the foreseeable future; I remain cost conscious in ordinary situations that are likely to repeat. If I’m doing something with my usual good friends, or if I’m on another date with someone I’ve been dating for a while and things are going well, then I’m going to be very conscious about the expense. At that point, I’m surrounded by people who know me well and they’re also almost entirely people who share at least some of my financial values, so I don’t feel bad about being cost conscious. I would not want to hang out with people who insisted on blowing a bunch of money every weekend. I would not want to date someone who wanted to blow a wad of cash on every date.
To make it very clear, if I can state an approximate date when this event or something similar will recur, I’m much more likely to be cost conscious and think about minimizing the expense. If I can’t state when it will recur, I’m much less cost conscious.
If I don’t want to eat at a super-expensive restaurant, I say so; if I’m the host and I’m choosing, I generally choose something local that’s unusual but not overly expensive. I have a handful of local places that I like to choose from when people come here from out of town and want to eat out. They’re all interesting places, but none of them are wallet busters.
If I am sure I can profit from a situation (without harming anyone), I pretty much have no limits, but I need to be absolutely sure. I have to be extremely confident about this, however, so it needs to be something well within my own domain knowledge. I’m not going to merely trust someone’s word on it. I’m also not going to “invest” in someone else’s idea or business plan without a ton of careful consideration. So, in that yard sale instance, you better believe I’ll pony up when situations like that happen if I know without a doubt that I can make a profit for myself.
I have some “flexibility” in my budget for these kinds of situations. In fact, I literally call that item “flex.” The “flex” item in our budget is so that we can afford to go over budget during situations like these, where the normal “careful consideration of purchases” has negative consequences, socially or otherwise.
A quick side note: I tend to avoid social shopping if at all possible. “Retail therapy” virtually never improves my feelings over the long term. If I’m hanging out with a friend, I’d rather be engaging in an activity that isn’t centered around money if possible; if not, then it should be a special occasion and shopping is not a special occasion.
The best approach is to not view stores as any type of entertainment or social venue. They serve the sole purpose of acquiring goods, and you’re far better off knowing exactly what you want before you go in the door. Going to the store to “kill time” or to browse or to socialize or to be entertained results in the spending of money that you weren’t intending to spend without any real benefit. If you want to just hang out somewhere other than your house, go to a park or a free exhibit or a free museum or some kind of public event.
One final tip: don’t worry much about what other people are spending. If someone else chooses to order a glass of wine or a side salad, it’s not your concern in that moment. You may later on decide that you don’t want to build a relationship with someone who spends a lot of money, but as a one-off choice, it doesn’t really matter. Your goal in such situations should be to build or maintain a positive relationship with this person, not to obsess over what they’re spending.
This might sound silly, but my preferred approach for this at a restaurant is to request to order last and then study the menu while others are ordering. I converse up until the waitstaff comes to take down our orders, then request to order last and make my decision quickly while others are ordering. That way, I generally don’t even know what they ordered, so it has zero impact on me whatsoever. I’m usually half-surprised at what comes to the table for the people I’m dining with.
In a nutshell, don’t be cheap in social situations or in situations where there’s a guaranteed upside for you. Save your cheapness for when you’re alone, with just immediate family, or with friends who feel similarly. That doesn’t mean that you should start throwing money around when others are around, but that you might find it worthwhile to relax those spending guidelines a little.