That’s the way I feel, every time I read or hear someone gasp:
OH MY GOD that is SO expensive.
I could spend that $700 on my rent instead of having bought an iPad! FOR SHAME.
It makes me feel guilty when I look back at my spending and compare it to what PF bloggers are spending online.
I think: Who am I to spend that kind of money?!!
Then I look at people in my own life (non-PF folks), and people on TV, and I think: Wait.. but I’m nowhere near what they spend. I’m downright stingy compared to them.
I think guilt is definitely a wasted emotion (Nietzsche), because I earned every penny I have of my net worth and I can spend it the way I want, within my own standards of “reasonable”.
SO SHOULD WE ALL JUST LIVE LIKE WE’RE POOR?
No matter what we make, should we all eat food that is on sale, and live like we’re poor, just because it isn’t “right” for us to have that kind of disposable income to spend?
Should I always feel guilty when I buy a $3000 laptop because I want it, even though for someone it’s 3 months of their rent?
Photograph I took of an open-air market in Beijing
Or maybe I should stop eating organic and/or good food and start buying $1 canned beans to eat on rice from the dollar store instead?
Where does it end? What’s the “limit” for good and proper ways to dispense of money?
The answer is that there is no good and proper way to spend your money, and that is the part that I have the real problem with — the judging without context of what people earn and how they decide to spend it.
YOU MAY BE WASTING MONEY IN OTHER WAYS
Sure, you’re poking at me for spending $3000 on what you think is an overpriced iSomething laptop, but while you’re haranguing me in your head about all the good things YOU could have done with MY $3000, you didn’t do any of the following in the meantime:
- Negotiate your annual salary, possibly leaving $10,000 – $30,000 on the table
- Negotiate at your annual review, possibly leaving a 2% raise for someone else
- Think about whether or not you need a car at all and if you could take the bus instead
- Avoid buying a home more than 2X your annual income because a home is not just the mortgage
- Spend time cooking at home and bringing your lunch to work on a daily basis
- Aim to save 50% of your income
But these are all things that I did and still on MY own time, before I bought all my fancy iSomethings.
Look, I am not saying that I’m awesome at saving money on all fronts, but enough with the shaming.
If I have the money, if I am not in debt, and I have saved well beyond what is expected, I can spend my money however I damn well want.
I do things that I already know are within my grasp. I am not spending my money stupidly, I’m spending it the way I want to live my life.
For instance, since I’m not rich, I don’t need to fly first class* when I book my seats, and I take the bus instead of owning a car that I don’t really need.
*Actually, even if I become a millionaire, I am not sure I’d ever feel the need to fly first class because buying those exit row seats is a luxury in and of itself…
I’d rather save the money, and create what I think is an ideal, reasonable budget for spending, no matter what my income is…. for me.
That’s right, a reasonable budget for my lifestyle, and what I like to do and spend money on.
LOOK AT EVERYTHING IN PERCENTAGES, NOT NUMBERS
Relative to your net worth, relative to your income, look at the percentages.
Someone who is $30,000 in student debt, going out and YOLO*’ing on a new car, an iPad, and what have you, is going to get flack versus someone who is not in debt, and has the saved money above and beyond their retirement accounts to spend.
If I bought a car for $10,000 which is 5% of my net worth (YIKES!) compared to someone who was $30,000 in debt, who buys the same car for $10,000, it is a NEGATIVE 1/3 of their net worth or – 33%.
(The moot point is not whether or not we actually need the car in the first place, I’m just looking at the numbers here as a percentage.)
The truth is when your net worth is in the negatives (meaning you can’t clear your debt in one fell swoop, and aren’t using it as leverage to get more money), you don’t really have disposable income to spare.
When you are wondering how you’ll make it to the next week for groceries on your paycheque, but then you go and buy the newest iPhone, then you don’t have the money to spare.
*YOLO = “You only live once”, invented by those who say it because they are justifying an expense and/or don’t want to save for retirement, live on less and/or clear their debt.
Hence the “personal” in personal finance.
..AND YOUR SITUATION IS DIFFERENT FROM SOMEONE ELSE’S
I bought a Longchamp bag for $100 in Paris (but it really costs $200 in Canada), and I find it’s very durable (I put 3 heavy laptops in there once), as well as practical, light, and easy to fold up and use.
I can use it in the rain, when I go to the grocery store, or the market, and basically any time I need a large errands-to-run purse but don’t want to use my leather ones for whatever reason.
My very practical Longchamp
Someone else who looks at the bag may think that it’s worth $35 to them, and think I’m stupid for spending my money when it could have gone to something better.
The personal part of that spending, comes in when you realize the following:
- That Longchamp Pliage bag (for me), has more than paid its cost with cost-per-use. I am down to pennies now.
- It cost 0.05% of my net worth
- If I need to ever replace it in 10-20 years, I can buy them used for less than $100 from consignment shops.
PERSONAL FINANCE IS PERSONAL
Personal finance and money management IS personal, but there’s also a minimum that everyone should adhere to, and that’s not to spend money you don’t already have to spend.
Although when I say “personal” in Personal Finance, there are minimums of when people go to far.
I absolutely agree that there are clearly stupid things with your money like buying a car that costs you 60% of your income each month, going on a splashy vacation when you’re deep in debt or giving money away to charity when you haven’t steadied your own finances to be able to do so.
Or perhaps extremes at the other end, like refusing to buy clothing because you don’t want to spend money, or trying to spend as little as possible on everything in your life because you don’t want to waste money.
However once we get past all that and we’re able to save and invest our money diligently, and are on the path to a solid retirement plan, I don’t see what the big deal is with spending money — that’s what it’s there for.
At the end of the day, my money is mine, and yours is yours to do with what you wish.
If you want to spend time taking freezing cold showers to save money so you can retire early, or if you want to spend your savings on a new Macbook Pro, be my guest — it’s your money after all, not mine.