It’s hard to change people’s money habits because it often involves the person sacrificing a lot of fun to save money for the future. Deep down, even the scroogiest saver would love to blow their money on vacations and nights out if it meant their future self would be financially sound.
Unfortunately, we live in reality and eventually–hopefully sooner than later–people start realizing they need to sacrifice some consumer pleasure for their future life, kids, spouse, and retired self.
This realization doesn’t mean that all of the fun has to stop and you have to turn into a wooden bore who only goes to the library, listens to the radio, and sits in your house with the lights off to save money on energy bills. Getting your money in order means that the important stuff is taken care of first (retirement contributions, student loans, bills, savings goals), so you you can then spend the rest on the stuff you love.
For example, I get a lot of enjoyment out of a few things: golf, travel, and eating nice dinners at home with my girlfriend. When it comes to these categories, after my important money stuff is taken care of, I rarely censor my spending because these are the things I love and would do every day if I could foot the bill.
That’s the goal of what we’re doing here, right? To enjoy the stuff we do and the people we do it with?
Now, notice a couple things about the categories I spend on:
1) There’s only three categories. I could list 7 to 10 other things I really like to do, but my income after bills, savings, student loans, and retirement contributions only allows me to do these things ever so rarely (like going to a live sporting event or buying nice clothes).
2) I said I hardly ever censor myself, but I still do a little. I don’t golf five days a week, I don’t travel to a different country every three months, and I don’t buy $75 bottles of wine because I like good meals at home.
It’s not reasonable to spend that way, and people who do will often find themselves buried under six-feet of debt regardless of their income. Just because you claim a category as “something you love to do and will spend money on” doesn’t mean you can max out 10 credit cards doing so.
3) My categories are all experience based. If you love electronics and want to buy every state-of-the-art computer or love the feel of a library in your house, then go right ahead and spend your money on those tangible items. It’s your money, and these spend categories are meant for you to enjoy your hard-earned cash.
Personally, I don’t spend money on anything tangible that can depreciate over time. It just doesn’t interest me to own a $35,000 car that’ll be considered old after 11 months. Instead, I spend money on experiences with other people that I’ll remember for a long time. These experiences are hard to show off to friends, but they make you a better person (most all of you know this, being the odd majority that chose to move to Japan).
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I feel like my dad saying this, but there’s always going to be some sacrifice in personal finance. The sooner you realize this is the way it has to be, the quicker you can start creating a sound financial system that allows you to spend your extra cash on the things you really love in life.
I may not golf every week, but if a friend calls me up, I’ll almost always be hitting the links. If a weekend trip to Nagoya arises, I’ll buy the bus tickets and spend a couple hundred bucks to have a good time with good people.
So, today, find the three categories you love to spend on and make a pact with yourself that you’ll spend what you have on these three things–after bills, student loans, retirement, and savings–and cut back on the rest of the fluff items and impulse buys.
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Austin is a 1st year junior high ALT in Fukui Prefecture. He hails from the grand city of Chicago and he enjoys hot dogs, his guitar, and baseball games. In his free time he writes about personal finance for twenty-somethings at ForeignersFinances.com.