Marvelous Money: How to spend money
We’ve had a nice little break from Marvelous Money posts (maybe to let the first three sink in?), but they’re back in action! I thought before we talked about ways to track a budget, it would be good to address saving money’s other half: spending money.
Yep, we’re talking about spending money today! [Keep in mind that we’re talking about spending money you’ve already budgeted for — I’m assuming you’ve already taken care of everything else in your budget (retirement, savings, etc.), and this is money you’re going to spend no matter what.] I firmly believe that how you spend your money is far more important than how much of it you have. Money can either be a powerful tool, or a source of endless frustration. I think the key to making money the former, and not the latter, is four-fold.
1. Figure out what you value. Sounds obvious, doesn’t it? We should spend money on things we value? We know this, but I think a lot of us don’t do it. The Starbucks example gets picked on a lot (you know, stop wasting money on your daily latte and brew coffee at home), but if the ritual of a morning cup of joe prepared especially for you truly makes you happy, then go for it! When you know what you value (whether it be security, family, convenience, heritage, adventure, and/or love), you will know exactly how you should spend your money in order to bring more joy into your life.
2. Buy more experiences and fewer material goods. John is a HUGE proponent of this strategy. And I think he’s right — people generally don’t reminisce about that great toaster they bought in the 90’s… they reminisce about the time they went to the Grand Canyon, or Aruba, or the mountains of North Carolina for a weekend away. Experiences take you out of your normal existence, they introduce you to new things, they make your life richer by having happened. In a phrase, they’re high impact spending. I also like that experiences bring joy even before they happen, as studies have shown that the largest boost in happiness around vacations comes from the simple act of planning a vacation. In the study, the effect of vacation anticipation boosted happiness for eight weeks!
3. Use your money to benefit others rather than yourself. This is a lesson that comes with growing older, I think, as we learn that it really is better to give than to receive. There are few things that please me more than choosing and handing over the perfect gift for someone, something that I know will improve their life and make them happy. Likewise, even if you’re spending 100% in line with your values (see no. 1), if you’re spending only on yourself, it will eventually start to feel empty if you never consider others. This short video (watch it!!) really drives that point home. There are very few ways to spend money that would be more rewarding, don’t you think? As I Like Giving’s tagline says, living generously is a surefire way to spend your money without regret.
4. Appreciate what you have. No. 2 might be John’s favorite, but this one is mine. If you want to spend your money well, learn to cultivate gratitude for what you have, and for the things that you buy. Buying only what you truly love makes this very easy. You might think I’m joking, but not a week goes by when I don’t say to John, “Man, I love this couch!” Our couch was one of the first “big” items we purchased on our own, and we saved for MONTHS to afford it. I loved it then, and I love it now. If you only buy things that you love, it will be easier to feel grateful for what you have instead of resentful and guilty about the clutter that surrounds you.
What do you think, my friends? Which one of these spending strategies resonates most with you?
P.S. Marget passed me this article a while ago, and though I only read the abstract, its findings definitely rang true for me!
P.P.S. Please don’t think by my second graphic I mean you should find your happiness in the accumulation of wealth; far from it. I simply mean that your money should be a blessing to you, not a burden; if it feels like a burden, you’re probably not spending it right.
I WHOLEHEARTEDLY agree with all 4 of these! Especially 2&4 (you and John have good taste :) ) My very best friend is getting married and to say I’ve spent money on it would be an understatement. But you know what? I know she deserves it and I know all the money that has gone into the planning will be WELL worth it when I get to experience her joy during not only her bachelorette weekend but also the bridal shower and then FINALLY the wedding. Definitely an experience, a lesson in giving, and something I value beyond belief.
Still loving this series, thanks Em!
I agree with this too. We are bit believers in travel experiences and because of that we don’t rush out to buy the latest toy or gadget that has others excited.
I am also this year focusing on reducing my impulse shopping. Taking that last second and recognizing the difference between need and want. It is making me MUCH more accountable to myself in terms of spending.
:)
I agree with you – Number 4 is my favorite. Every time I think I just “need” something (we throw around the word “need” way too much in our culture!), I simply look at what I already have… which is immense wealth, compared to the rest of the world. We have SO much to be grateful for!
On the note of your couch and point #1, my shopping habits have changed lately to really only purchase what I truly value. They might be more expensive purchases, but in the long run, I value them so much more. I used to by a lot of little stuff, cheap stuff, just because it was a good deal or on sale. Now I buy much less, but save my pennies to only put them towards what I value. I’ve found I really enjoy this way of spending much, much more!
Wonderful post!
Number 2 is my favorite! In my bubble of relationships, people know me as the person who saves like a maniac for a year, takes my lunch every day, and wears the same clothes for way too long (i’m telling you…waaay tooo long) all so I can go on a vacation. Hey! It’s works! And I’ve been on a vacation every year since implementing this strategy. However….I really do hate my couch hahaha Something tells me I might have to skip a vacation here or there to get a new couch…and a new mattress. But you know, if I sit on the couch and pretend I’m back in Maui, it actually feels pretty good! Hmmmm :)
congrats on a great post! we just bought our first big furniture purchase this morning and i am SO EXCITED. #2 is so so true. i will never be able to trade my study abroad time in italy for anything in the world and it was the most fun and educational time in my life!
I’m relatively new to your blog, but I’ve really enjoyed this series. I have been told I’m “frugal” by friends and family. I took insult to this because I’m not frugal. I can lay down a credit card with the best of them, it’s just that I shop and buy with INTENTION. Like Nancy mentioned, it may be that you end up spending MORE than you normally would, but if it’s something that lasts, something that creates or represents a memory, or is something truly desired, I think it makes for a more meaningful life. I also like to buy local. For instance, I support local artists, and while this costs me a lot more than going to Pottery Barn, I appreciate the item so much more, and feel pride displaying it in my home because I know what it means to me. Plus, these items usually have a STORY behind them, and I’m all about the stories, the history, and the eventual HEIRLOOM for my future children. As I get older, that’s what really matters to me. To have quality, cherished items that aren’t “throw away”. I am also a big proponent of experience versus material items – even if that is as simple as spending money on a meal out and walking around the city versus that new shiny vase. It’s not that I’m being “cheap” or even saving for a rainy day, it’s just that I’m saving for that “thing” I really want – whether it be a handmade dough bowl from an artist in North Carolina or an impromptu weekend road trip. I think it’s something a lot of folks find silly, but in my book, if that’s what defines “frugal”, then I’ll be frugal till the cows come home!
This is such a great post. We’re the same way- every dollar we have is spent on paper before we spend it. We’re in the process of paying off our debt, which we are so thrilled about! Spending less money automatically makes you more considerate of what you already have, and helps you save for things that are truly important.
Great post! :)
In total agreement with you on all four spending strategies, Em. As I’ve gotten older, I’ve learned that what I value most is worth spending money on. Before I purchase something, I consider the value behind it – is it something I will enjoy, keep, use, and appreciate over time, or is it just a passing trend that I can do without? Contentment with what you have is the best way to weigh the value of things, and experiences far outweigh any material possession. And I agree with you on learning as you get older that it is better to bless others with your money. I think I get more satisfaction in doing that than in getting anything for myself. If age really is a factor (or simply maturity) maybe that’s why grandparents are so good with that one :) Great post.
@Elizabeth I love your theory about grandparents!!
This is a great post! Thanks for the link to the Science article. It’s fantastic!
[…] Awesome tips from Em on how to spend money. […]
Lovely post Em. My favourites are points 1 and 4. I worked out that spending my money has to be for “love”. The question I ask myself when purchasing is “do I LOVE it?”. Not just “do I like it?”, “is it ok?”, “will it simply do the job?”, “is it on sale?”, “is it what I think I have to have?”. Its very reassuring reading your (and Nancy Rays) posts on managing money; reassurance that you don’t have to have everything (and that that is a-ok) is good!
I love this post, especially the point about spending on experiences rather than things. As much as I can look at and appreciate things like gorgeous designer shoes, I don’t think I could ever buy them knowing they cost the same amount as a plane ticket to Italy!
I would say between 2 & 3 resonate with me most! 2 because I’m learning to do this: “Do I want this pair of shoes because they’re Kate Spade or because of how I feel when I’m wearing them?” Or would I rather buy a purse or take my mother and sister out to eat at a new place that we all enjoy…obviously the latter! It’s a process, but it’s happening!
3 because I’m realizing I have an easier time impulsively spending money on others (good and bad thing), and I want to keep it that way, only to keep it within budget and reason.
I’m really enjoying this series!Not only as a business major (whoop!) but also because it’s reminding me to be conscious of my monetary blessings!
I was really excited to read your Marvelous Money series after I your talk on Day 2 of Making Things Happen 2013! I set time aside in my schedule to read all the posts. It is really great to read financial posts from someone who just has a passion for it and is not in the industry. My fiancé and I are both in our 30s and always wanted to be more financially savvy but are naturally spenders and not savers. These posts along with listening to you at Making Things Happen have really helped me really set a plan to place a higher priority on our financial health rather than crossing our fingers and hoping things turn out okay. I look forward to your future posts.