Is Spending Money “Bad?”
Shownotes
Oh my gosh, I want to start this episode off with a HUGE FREAKING THANK YOU to everyone that has listened to the Thrive With Money podcast. I checked my podcast stats yesterday and they have seriously SKYROCKETED over the last month. Like, my jaw dropped when I saw the numbers because this podcast has already totally surpassed the expectations I set out for it when first getting started.
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Ugh, you are all so amazing, and I’m so grateful for this community and seriously can’t wait to see what’s in store for this podcast in 2022.
Is it really “bad” to spend money?
Alright! Let’s talk about today’s podcast topic, which is on spending money, why spending money is not inherently a bad thing, and how to release feelings of guilt and shame around spending.
I talked about this briefly in my Instagram stories yesterday, and it resonated with so many people that I was like “ok this obviously NEEDS to be a whole dang podcast episode”
There is a LOT of messaging out there that’s encouraging people to spend as little money as possible and why you should basically stop spending money on conveniences
And there are financial educators out there that have built entire BRANDS on this idea that you should spend as little money as possible, and can make people feel really BAD in the process!! Like Dave Ramsey telling people to live on beans and rice until they’re out of debt. Or Tim Gurner, the avocado toast guy, telling people they haven’t been able to buy a house because they buy avocado toast (which, to my knowledge, I don’t think he has built a brand on BUT that video did go super viral because it made a lot of people feel bad about themselves!)
And, here’s what I believe to be true, and this is something that I teach each and every one of my clients:
You work hard for the money you earn, and you should enjoy spending your money!
But, because of the messaging we receive about how we should essentially spend as little as possible, we never learn how TO spend on the things that truly matter to us.
Because of this, I see two different things happen often with the clients I work with:
Feeling guilty about spending money on ANYTHING (necessities included)
Or going through a pendulum of two different extremes: where you swing from a period of lots of spending to a period of being SUPER FRUGAL because you feel guilty about that spending, and then feel super restricted an go on a spending spree, and the cycle repeats itself.
So let me just set the matter straight right now: is it bad to spend money?
NO!
Spending money in and of itself is not bad.
Does that mean spend above your means, accumulate credit card debt, or have no idea where your money is going? Also no.
The goal is to spend money and save money for the things that truly matter to you, while limiting the amount of money spent on the things that aren’t really important to you.
You’ve heard me say this once, you’ll hear me say it again and again, money is a tool to live the life of your dreams. So if there is something that you enjoy spending money on and it fits in your spending plan & the action steps to achieve your financial goals, there is NOTHING TO FEEL GUILTY ABOUT!!
But why do we often feel guilty spending money?
Even if it’s something that we actually want or is truly important to us?
There are a couple of reasons why this can happen:
Reason number 1: worrying that the money “should” go towards something more important, like necessities or savings.
Usually, when this worry starts to creep up, it happens because a spending plan wasn’t made for that money to begin with, so it IS a legitimate worry!
I mean, NO ONE wants to buy a shirt and wonder if that shirt will cause them to miss rent that month. It’s an extreme example, but you know what I mean.
The solution to this is to create a spending plan for your money in this order:
Necessities (food, housing, utilities, transportation, etc.)
Financial GOALS (savings, debt repayments, investments)
Wants (recreation, fun money, restaurants, shopping, whatever)
And you can use the 50/20/30 rule for this as a benchmark: where 50% of your expenses are going towards your necessities, 20% towards financial goals, and 30% for everything else, but you knooooow that I’m not a fan of one-size-fits-all approaches, so use those percentages as a BENCHMARK and then find the numbers that will fit your financial situation, your goals, and your values.
Now, if you find that you’re feeling guilty about spending because it is causing you to accumulate debt or preventing you from reaching your financial goals, then that is definitely a sign to dig deeper into where your money is going and ensure that you are living within your means, create a debt repayment strategy, and implement a spending plan where you are taking care of your necessities and financial goals FIRST before spending money on wants.
But, when you KNOW that you’ve already set aside the money you need for your necessities and goals, you can spend guilt free because you’re confident that money isn’t taking away from anything.
Reason #2: you might not be spending on the things that ACTUALLY matter to you
When we’re talking about guilt and spending, it’s also important to take a look at the wants that you’re spending money on to make sure that they’re the wants that YOU actually WANT to spend on in the first place.
So, for example, Oliver and I love to go backpacking and camping in the summer. This is a relatively new hobby for us (last year was our second season doing it), and as our hikes got longer, we needed to make some upgrades to our gear so that it was a lighter weight material. Because when you’re hiking 40 miles over the course of a week, 20 pounds gets REALLY heavy.
This past summer, I started having some feelings of guilt creep up around my spending, because honestly I felt like I was spending outside of my comfort zone, and needed to check back in with my values and overall spending to see what was causing me to feel out of alignment.
And by doing a 30 day spending audit, which is basically where you go through and track ALLL expenses (including transfers to savings & debt payments) for the last 30 days, I was able to see that I needed to reprioritize my spending to be more aligned with what’s most important to me at the time.
And, last summer, this meant being more intentional about the money I spent on clothes so that I could prioritize upgrading my hiking gear.
So, when it comes to planning your spending, know that there are going to be times when you need to check back in and see where you can make adjustments, and there is NOTHING wrong with that!
Remember, personal finance is a LIFELONG skill. Our spending habits are going to change and evolve over time.
6 Things It’s Okay to Spend Money On
So, with all of that in mind, I want to talk about some spending areas that I personally think it’s okay to spend money on (again, within reason–you always want make sure you are spending in a way that is within your means, and doesn’t prevent you from achieving your financial goals)
But, again, if you are doing that and you STILL feel guilty about spending on yourself because of money scripts & beliefs you grew up with (and from the DMs I got in my inbox yesterday–I know that a LOT of people are experiencing this!), here are some areas that hopefully you can release some spending guilt around:
The list below was inspired by this post in Business Insider by Tanza Loudenback.
Anything to maintain your health and wellness (a lot of times, this can actually SAVE money over the course of a lifetime). Plus, we only get one body, we need to take care of it.
To improve your skills (which can help you maximize your potential both in your personal and professional life)
To buy things that make you happy or save you time
This could honestly be anything that aligns with your values
Do you enjoy trying new restaurants with friends? Great!
Shopping? Awesome
Travel!! Create a travel sinking fund.
ANYTHING that you’ve been saving for
I worked with a client recently that had been building a travel sinking fund for a trip for over a YEAR, and when they returned from the trip I asked them how the trip was and they said “it was great but I spent a LOT of money.”
So I asked them “did you spend more than you had saved in your sinking fund?”
And they replied “Well, no, but it was still a lot of money in one week!”
And I said, “but you spent the money that you have been planning to spend for over a YEAR on this vacation specifically–there is nothing to feel guilty about there!”
When you’re saving for a specific purchase or experiencing, and the time comes to spend that money, PLEEEASE don’t feel guilty about it! That’s exactly what that money you’ve been saving is for.
To buy something higher quality that you care about and will last you a long time
I can’t remember if I’ve given this example in another podcast episode or not (I know I’ve THOUGHT about giving this example several times) but I want to tell you a story about my grandma, who has a new vacuum cleaner almost every time I see her (which is 3-6 times a year)
And my grandma is a very frugal woman. She was born right after the great depression started and, naturally, frugality was a big part of that entire generations upbringing
But my grandma has always bought one of the expensive vacuums at the store (let’s say they’re about $50-$60 each). And she needs to replace them so often because they break so easily. With a quick Google Search, some of the most “durable” vacuum cleaners on the market can be purchased for around $300.
And, in all likelihood, that $300 vacuum would probably last a few years, which would SAVE money in the long run.
If it’s something that you will use often and want to last a long time, buying the higher quality item can save you money down the road.
Your passions
Again, if you care about it, go for it.
Final Thoughts
The big moral of this podcast episode is to make sure you’re spending within your means (make your spending plan in the order of necessities, financial goals, and then wants) but to then RELEASE THE FEELINGS OF GUILT when spending on your wants after that.
Spending money is not a bad thing. It’s okay to spend money.
I don’t want you to feel guilty spending on things that truly matter to you when it fits in your spending plan to do so. Finally, remember that deciding on the things that are important to you and including them in your budget will help you actually STICK to your budget!!
So, that’s all I have for you today!! I hope you have an amazing weekend, and I will see you next week!
Disclaimer: The content and information provided on this podcast is for educational purposes only and does not constitute professional financial, legal, or tax advice. For recommendations on your specific financial situation, you must additionally seek the services of an appropriate licensed legal, accounting, tax, or investment professional.
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