124 | Spending Observations
Financial wealth you have accumulated means nothing without the context of what you need.
What you need - or expect - is best reflected by what you spend.
Reflecting on a single month of spending is misleading. Reflecting on a year of spending is interesting. Reflecting on a few years of spending tells a story.
Some spending happens on purpose. Some by accident. Some out of obligation. Some with discretion. Some happens once. Some happens over and over again. But it all counts as spending.
Most feelings and emotions around spending point back to two questions - is my level of spending viable? Does my spending drive lasting contentment?
Many "one-time" things can make for one recurring expectation. There is no end to the list of things that we can spend on.
Debt is a tool to spread cost over time, which is a polite way of saying debt allows you to buy something that you can't afford right now.
Paradoxically, debt often decreases contentment, while generosity often increases contentment.
It's easy to think you'll be generous once you have "enough". I think you'll begin to more clearly see "enough" once you are generous.
A good filter for any spending decision is “how will this change my expectations in the future?”.
Some spending is a standalone event and some spending begets more spending - the latter is the one that allows our expectations to change without even realizing it. The former is not as big of a deal as we often tend to make it.
It's easy to think that "spending less" is good and "spending more" is bad - I'm more interested in the non-financial benefits that accompany spending. The best spending leads to non-financial wealth.
A crude quality of spending metric is hours of contentment per dollar spent. Hours spent anticipating and reminiscing can count in the equation too.
Most everyone says they prefer spending on experiences over things, but that's not how everyone actually spends.
Inevitably, you will regret some spending decisions - forgive yourself for them, but don't totally forget them.
Knowing where you spend dollars provides a freedom that reveals itself in the tighter times, "we need to spend less on _________" is a sneaky freedom that is 100x different from "we need to spend less". *If your income has never decreased, you probably can’t appreciate this one.
It's a lot easier to say "no" to 1 thing than it is to say "no" to 1,000 things. Spending $5,000 less on a home or a car or any other big thing is the same as saying no to a daily coffee for almost 3 years.
No one ever built financial wealth by accumulating sign up bonuses for credit cards or getting 5% on travel.
Missing one monthly budget never wrecked anyone's finances. Missing every month's budget probably means you have a bad budget.
A built-in governor for lifestyle creep is to buy (or wait to buy!) luxury items once you have non-wage income.
If you fear seeing the monthly credit card balance, switch to paying it down weekly or even daily for a season. Decreased fear and increased awareness is a good combo.
Trying to predict someone’s financial well being by observing a few spending decisions is about as reliable as a 365-day forecast would be from a meteorologist.