In Chapter 1 of All the Money in the World, I suggest that readers look through their bills and receipts — but not for the usual reasons (that is, to tally it up and make sure the money coming in is more than the money going out). Instead, I ask how these expenditures make you feel. What are you thrilled to spend money on? What just makes you annoyed? What seems like a good idea at the time but later turns out not to be?
If you keep asking these questions, over time, you can start to ascertain what has a high utility function for you. The reason to do this is that knowing what makes you happy can help you make better financial choices. We waste a lot of money doing things we think will make us happy, but don’t. Better to use that money on things that actually will get you closer to the life you want.
So what falls into my do-not-spend bucket? After thinking about this topic for the past year or so, I’ve got a few ideas.
First, there’s “clothes I got a deal on.” There’s something psychologically satisfying about getting a bargain, or at least thinking you have, but I read recently that much of J.C. Penny’s merchandise was sold at around 50% off. Clearly, for many stores, a “bargain” is no such thing — it’s part of the company’s strategy. For years, I’ve bought cheap shirts or shoes, and then seen them sit in my closet. It’s not a bargain if you don’t wear it. So I have pretty much stopped shopping for clothes. I borrowed maternity clothes for this last pregnancy. Despite my handbag sporting ink stains, I plan to keep using it until I find a new one I truly love (Zappos is helping this by having their little ads follow me around the web — showing the handbags I’ve clicked on. Curse you, targeted marketing!) I’ve kept repairing a pair of sandals I love rather than buying new ones.
I never buy lunch unless I’ve got a lunch date with a friend. Leftovers work fine. I don’t order pizza much anymore either. DiGiornos tastes as good to me as Dominos, and it’s cheaper.
I don’t buy soda. I’ve realized I don’t actually like it. Diet Coke gives me the hiccups.
I find fancy salons a wee bit creepy. So I’m quite happy with this place I found that charges $23. I can be a big tipper and it still doesn’t come close to what I was paying in New York.
On a much larger note, we realized we weren’t getting enough out of our NYC taxes to justify living there. So we moved, thus saving a bundle there.
But there are also things I’ve decided are worth spending more on. I love eating out in intriguing restaurants — one reason we ate at Sbraga in Philly for an early Valentine’s day dinner (it also helps that a friend is a part owner; I like supporting my friends’ businesses!) I love art, so that date included a stop at the Philadelphia Art Museum to see the Van Gogh exhibit. Our art museum membership definitely has a higher utility function for us than spending the equivalent amount on Valentine’s day presents for each other. I’m going into NYC soon for a concert that features a world premiere of a Mohammed Fairouz work performed by the Young New Yorkers’ Chorus. I know that hearing live choral music, particularly that no one has heard before, makes me happy. It definitely makes me happier than spending, say, the maximum amount that various calculators would say one could spend on a mortgage.
I realize that we live in tight times and many people don’t have much choice about where the money goes. But plenty of people do have choices. I think that part of being good stewards of our resources is being mindful of them. It’s an ongoing process — like teaching myself to stay out of Target — but a worthy one nonetheless.
What’s worth the money for you, and what is not?
(photo courtesy flickr user epSos.de)