On Frugality: Considered Spending

Where and how you spend your money is closely related to your ability to retire comfortably. It might be time to consider putting some thought towards it.

Frugal by CafeCredit.com

Spending is something I’ve long thought about. As someone who no longer owns their own car, I’ve come to believe that what we presently own should not dictate the shape of the rest of our lives. I now share my girlfriend’s car, as an intentional choice. I could have replaced my old car, but decided it didn’t make sense. While I still lived in Ottawa, I could bike to work nearly as quickly as I could drive there, including parking, with a fraction of the stress.

Considered spending is a huge part of one’s personal finance success and ability to retire. It all comes down to saving more than you spend, focusing your spending where it really matters and investing as much as you realistically can in low fee products.

With that said, here are some of my thoughts on how one might be served managing their spending habits:

Spend more today to spend less tomorrow. Spending more upfront on quality, can help you save in the long-term. There’s a great quote from Terry Pratchett’s Men at Arms, Captain Samuel Vimes ‘Boots’ theory of socioeconomic unfairness, which sums this up exceptionally well. You may initially spend more, however in the long run you can end up saving in replacement costs.

Spend your money where you spend your time. This can be on a computer chair, good quality shoes or a good quality bed. Areas where you spend most of your time may be areas where spending actually makes sense. If you use something only infrequently, is it really worth allocating limited assets towards?

The bigger the purchase, the more time should be spent carefully assessing whether it is something you actually should be spending money on. Spend some time carefully considering your purchases before going all in. I spent a few weeks researching commuting bicycles before actually buying. This cooling off period, before pulling the trigger really helps put things in perspective. You’re less likely to make an expensive impulse purchase.

Spend money on experiences, not things. Sure, I could spend money upgrading my really old computer, or my phone which occasionally resets itself. I’d probably derive some satisfaction from such a purchase, however, it would be short lived. I’d likely soon adapt to the new widget, no longer quite appreciating the improvement over what I had before. A trip somewhere, by contrast, builds memories and is more likely to have a positive impact on long-term happiness.

Consider your spending and control where you allocate your money. Don’t let consumerism dictate what you should own, or deserve to own. It’s no path to long-term happiness nor to financial success.

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