[HN Gopher] The art and science of spending money
___________________________________________________________________
The art and science of spending money
Author : thunderbong
Score : 205 points
Date : 2023-01-16 03:55 UTC (19 hours ago)
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| majidazimi wrote:
| The goal of saving is to have a lifestyle that you can MAINTAIN
| during retirement.
|
| - if you save 60% of your income, your lifestyle will be severely
| damaged and you won't become a spender all of a sudden the day
| after retirement.
|
| - If you save 5% of your income, then you won't be able to lower
| your lifestyle once you retire.
|
| Saving 15/20% of income isn't a magic number. But it's something
| that doesn't damage your lifestyle + it accumulates to a
| meaningful amount that saves your ass in old times.
|
| Going aggressive in either direction (spending or saving) is not
| the right mindset, because you won't be able to CHANGE once you
| adopt a specific lifestyle.
| mejutoco wrote:
| There can be many goals for saving.
|
| It is easy to imagine parents that want to save as much as
| possible for their kids, for example.
| imtringued wrote:
| Why would a kid need "saving as much as possible", did you
| ask them? What if they need the money before your death?
| mejutoco wrote:
| To help them go to extra curricular classes they enjoy,
| university, study or live abroad, buy a house ...
|
| My original point was about saving not having a single
| reason, but varied ones. Maybe not "as much as possible"
| but enough to provide for any of the things above for one's
| kids.
| fleddr wrote:
| It's very much good advise to optimize spending by not spending
| where it's useless (no utility, social signaling) and to possibly
| increase spending where the happiness return is high.
|
| For the people that are frugal for life to the point where it
| comes at the expense of quality of life, one relief is the tactic
| "spend to save". Lower your TCO by spending. Pay down loans and
| the mortgage. Make your home more energy efficient. Replace
| crappy products with things that last a long time.
|
| It's an undervalued strategy. Extreme savers basically prepare
| for volatility. They have insecurities about the future. Lowering
| your future expenses reduces volatility and increases freedom at
| a later age. You're less affected when bad things happen. You can
| scale down work by working less hours or a simpler job.
|
| This is one way to not end up as the richest person in the
| graveyard and it allows you to gradually retire.
|
| That aside, one aspect the article did not address are family
| dynamics. I do not care about what car my neighbor drives or what
| he thinks about my car. Yet still one can be affected by "social
| wealth" within the context of a family.
|
| One may be frugal whilst the other is not. You can guess who
| wins. The kids need Disney+ and somewhat later a smartphone, as
| you don't want them to be outcasts.
|
| Society does have (subtle) ways to force you to spend, it's not
| necessarily flexing or one-upping, rather "fitting in".
| trabant00 wrote:
| I have two rules to guide me that can be summed up to maximizing
| the joy of spending:
|
| It's not what you have, it's what you do with what you have that
| matters. Going with a car example, spending significant income
| for a nice car that you use for normal transportation like
| commuting and shopping will bring little joy. On the other hand
| if you are into motor sports, regularly tour on or off-road, like
| to restore classic cars, etc, you will get a lot out of a big car
| purchase.
|
| Spend it on one thing, don't have it for another. It's really
| hard for me to calculate if something new is worth X amount of my
| money. So I transform that money into something I already know
| how much it costs and how much I enjoy it. Would I rather change
| my car for a new one or take 10 one week trips abroad? I'll take
| the later so I decide against the new car even though that will
| not be exactly what I spend the money for.
| imp0cat wrote:
| > Would I rather change my car for a new one or take 10 one
| week trips abroad? I'll take the later so I decide against the
| new car even though that will not be exactly what I spend the
| money for.
|
| Wait till you experience one with a heated steering wheel. That
| might change your mind, especially if you live in a colder
| climate.
| IanCal wrote:
| > So I transform that money into something I already know how
| much it costs and how much I enjoy it. Would I rather change my
| car for a new one or take 10 one week trips abroad? I'll take
| the later so I decide against the new car even though that will
| not be exactly what I spend the money for.
|
| This is a really important idea to me, it's a way of optimising
| your spending without doing big central planning. If I would
| get more from doing X rather than Y, why would I do Y at all?
| You could then repeat that with 10 trips abroad vs some other
| thing.
|
| You can also compare a relative thing as well. You may need a
| new car, but can choose between different options. If one is
| PS5000 cheaper than the other - what's the most fun you can
| possibly have with PS5000? Would you rather whatever that list
| is for you or the more expensive car?
|
| Would you rather have a larger rented apartment or PSZ to spend
| at restaurants every month? Or PSZ on track days, or whisky, or
| having an extra few days off a month?
|
| All of these things can be answered any way and it's totally
| fine - the key is to identify what provides the most value to
| you without getting stuck in trying to optimise your entire
| life as that's (to me) paralysing.
| kettleballroll wrote:
| Just being pedantic here, but: if we take your approach to the
| extreme, we would only ever pick the one thing that maximizes
| joy. Eg say one week trips above are the coolest thing you can
| think of. then you'd compare any potential purchase against it,
| and it would fall short. So you'd end upmnever buying anything
| (except tickets for one week trips). Don't get me wrong, your
| strategy sounds sound, I'm just saying that it's too greedy of
| an algorithm to apply it thoroughly. A slightly improved
| strategy would be to instead think of marginal prices: how much
| would I be willing to pay for X, instead of _another_ piece of
| Y. Ie, if you already had 10 one week trips this year, you 'd
| not be willing to spend as much for #11 than you'd be willing
| to spend to go from from 0 to 1 trips or 1 to 2
| nickjj wrote:
| > then you'd compare any potential purchase against it, and
| it would fall short. So you'd end up never buying anything
| (except tickets for one week trips)
|
| I think there's a number of folks out there who do this all
| the time, except it's not trips. It's saving for retirement
| in general.
|
| If all you do is compare every outgoing dollar to "but if I
| invested this instead, then over X years it would have
| compounded to $X" you never buy anything non-essential
| because spending $400 today really means $1,787 in 30 years
| at 5% (of which $1,387 is interest), so now you need to ask
| yourself if future self is happy about that decision.
|
| This becomes more important with larger purchases, a $30,000
| car is really $134,032 after 30 years at 5%. Now this becomes
| a question of "is this 30k car worth trading 1 year of my
| life while working?" because it kind of is, especially if you
| factor in income tax on a pretty normal software developer's
| salary.
| mensetmanusman wrote:
| One thing that helped me coming from a background of poverty is
| realizing that all unspent money is charity, because if you die,
| it is going to someone else. If you are not comfortable with
| where it is going when you die, change your will.
| sc077y wrote:
| Very interesting article. Following the articles logic, you
| should be able to deduce a country's Social mobility based on the
| number of exotic items (such as supercars) you see in public.
| Furthermore, it becomes apparent that Europe has lower Social
| mobility than the United States. You will seldom see exotic
| sports car in the streets in Western Europe because most of the
| wealth are from well established institutions and families.
| [deleted]
| rsynnott wrote:
| Western Europe has generally higher social mobility by most
| metrics than the US (mobility between income cohorts, education
| level vs parents, etc). The US probably does have more people
| becoming really, _really_ rich, though, and also has slightly
| different social norms around money and the showing-off
| thereof.
|
| (That said, this is mostly differences at the margins. The mean
| price of a new car isn't much different between the US and the
| wealthier EU countries, say; the upper-middle-class are happy
| enough to buy cars that cost more than an average annual
| household income in both places. It's where you start getting
| past low six figures that people start getting squeamish)
| jandrewrogers wrote:
| Social mobility is the wrong metric. The economic mobility in
| the US -- the ability to increase your absolute income -- is
| far higher than in Europe. Countries with compressed wages
| have high social mobility, almost by definition, by low
| economic mobility. Since the US experiences very low wage
| compression compared to most countries, it will never be
| "socially mobile" but will have anomalously high wages for a
| large portion of the population.
| sanderjd wrote:
| > _The more you were snubbed while poor, the more you enjoy
| displaying your wealth._
|
| Man I dunno about this. It does seem like a thing for certain
| personality types, but I usually see exactly the opposite. All of
| the people I know who have "made it" from a less wealthy
| background are the opposite, living with a ton of guilt about
| their new wealth. I think this is because of having tons of
| family and friends still scraping by. It is very unseemly to be
| flamboyantly wealthy when everyone from your past is struggling.
| Maybe there is another inflection point of wealth, further down
| the road than the circles I run in, where you can afford to pull
| everyone else up too. But I'm pretty skeptical of that too.
| Something that has frustrated me to no end as I've started making
| good money is that I can't use any of it to improve the lives of
| people I actually know. They aren't going to take my money!
| They're doing just fine thank you very much. Even broaching the
| subject could ruin a relationship.
| mensetmanusman wrote:
| Something our family does is to purchase things for the good of
| helping others. E.g. buy a trailer/truck that others are free
| to use to move stuff, this can save hundreds of dollars. Broach
| the topic of getting rid of appliances you are 'upgrading' and
| asking if they would want the old ones, etc.
| unity1001 wrote:
| This is something that is valid more for societies like US,
| where being rich is seen as proof of 'hard work' and 'making
| it'. It defines your social status and actual social worth,
| therefore not being rich is like a stain.
|
| Its even built-into the terms used for describing it -
| someone's 'net worth'. As if a human being can be qualified by
| the amount of imaginary numbers attached to his or her social
| identity.
|
| So becoming rich from poor gives a proof of 'making it' and
| therefore being a 'valued member' of the society who does not
| 'laze around' but 'works hard'.
|
| Its early Puritan Christian belief repurposed as a social norm,
| really.
| TeMPOraL wrote:
| > _Something that has frustrated me to no end as I 've started
| making good money is that I can't use any of it to improve the
| lives of people I actually know. They aren't going to take my
| money! They're doing just fine thank you very much. Even
| broaching the subject could ruin a relationship._
|
| There was a period when we had this "dance" with part of my
| family, who had a rougher patch financially, but tried not to
| show it. We'd occasionally help them out with shopping (as they
| didn't have a car, but we did), and always conveniently
| "forgot" to take money from them, or "accidentally" mixed their
| and ours grocery so we had to pay for both, and the receipt
| would "somehow" get "misplaced" along the way. I think both
| sides knew what's going on, but neither wanted to talk about it
| directly.
|
| But I guess it's better to maneuver around feelings of pride
| like this, than having to defend yourself from family members
| and "friends" who _do_ want your money, quite _actively_ , as I
| hear is a common problem faced by those who get a windfall.
| thwarted wrote:
| The 80s Disney movie "Lots of Luck" is about what you
| describe in your last paragraph, and I'm willing to say that
| watching this movie as a kid probably influenced my style of
| money management.
| guardiangod wrote:
| I must be in the minority. I grew up poor (collected pop cans
| from my local Sun office as an office cleaner and sold them for
| deposits), so its scar will always be with me.
|
| But when I was younger, someone once said 'money is not the
| thing; money is the thing you use to get to the thing.'
|
| So now I can switch between being thrifty or being 'careless',
| depending what I really desire- and this requires constant self-
| reflection, a constant self-question of would spending this money
| do anything for my goals (which should include helping others.)
|
| In other word, like that Japanese cleaner lady, I ask myself
| would spending this bring me joy?
| monero-xmr wrote:
| Growing up poor and then becoming self-made wealthy - nothing
| like it. My life is so sweet because I am one of those fabled
| bootstraps people who walked 15 miles to school both ways uphill
| (paraphrasing).
|
| And what is my favorite thing? I can buy any meal at any
| restaurant I want and I never care about the price. It's a
| glorious feeling. I eat whatever I want. Unfathomable
| [deleted]
| ant6n wrote:
| > I can buy any meal at any restaurant I want and I never care
| about the price. It's a glorious feeling. I eat whatever I
| want. Unfathomable
|
| My budget for food used to be limited by money, now it's
| limited by calories.
| EVa5I7bHFq9mnYK wrote:
| And time. Restaurants are very time consuming.
| toast0 wrote:
| Depends on when you visit them. If you go at peak, the wait
| times get pretty bad. If you go not too long before the
| peak, things usually go much faster as it may be fully
| staffed already. If you go between peaks, things get slow
| because the kitchen may not be fully staffed or is also
| working on prepping for the rush.
| boringg wrote:
| Not really. Include food prep and clean up in your
| equation.
| saddd wrote:
| You can order takeout.
| imtringued wrote:
| Apparently you didn't pay attention in economics class. Human
| wants are infinite.
| wrldos wrote:
| Nope. I've got everything I want. It's not a lot. I'm
| collecting a ton of money now that I don't know what to do
| with.
|
| Promoting wants is the foundation of economics however.
| mythhouse wrote:
| > I'm collecting a ton of money now that I don't know
| what to do with.
|
| Why not increase your desires.
| wrldos wrote:
| Time is limited. Doing too much detracts from what I do
| want to do.
| proxygeek wrote:
| > ... can buy any meal at any restaurant I want and I never
| care about the price. It's a glorious feeling. I eat whatever I
| want.
|
| This. Not quite there yet, but still have a decent selection of
| restaurants where I do not have to look at the right-margin. It
| is truly a sense of freedom one can only experience in
| hindsight (not consciously while looking at the menu).
|
| Good for OP.
| [deleted]
| comfypotato wrote:
| Happy for you. I hope to one day be able to honestly express
| "this is a good life, and I am experiencing things that were
| unfathomable when I was younger".
|
| Care to share any details about how you did it in the context
| of a website dedicated to an older root of the word hacker than
| the more modern meaning?
| monero-xmr wrote:
| The only reliable way of creating a huge fortune from scratch
| is to start a business. Many failures for me before it worked
| out.
| PopAlongKid wrote:
| So it isn't so reliable after all, according to your own
| testimony.
| monero-xmr wrote:
| There are many reasons to start a business. I like doing
| so because the most honorable path IMO is serving others
| - I make more money the more I provide people what they
| want. They voluntarily give my businesses money. That's
| far superior to being paid by taxes, stealing, inheriting
| it, and so on. Voluntarily receiving money from people
| who desire the services of my businesses is the best
| thing I can provide humanity. Becoming wealthy was a
| consequence of serving a huge amount of people well.
|
| The latter part of my life will involve various ways of
| using my wealth in ways I see benefit society. This will
| be very unique to my own style.
| comfypotato wrote:
| From this I derive that you believe you are compensated
| for the good you do humanity. I, too, hope this is true.
| Thanks for answering my question and defending your
| position.
| 63 wrote:
| I've been struggling with knowing how to spend money now that I
| have it. I don't even have that much, just slightly above a
| median salary but that's so much more than I've ever had before.
| I spent all of college wondering if the current semester would be
| my last and now I can just pay off my loans in a year if I really
| want to. It's incredible but also really unjust because I know so
| many people are experiencing what I experienced but here I am
| with a bunch of money sitting around not helping people with it.
| I want to make sure I can really justify every purchase and
| investment because I know how much the same money could mean to
| someone else. At the same time though, that's a stressful
| worldview to have and I also need to make sure I'm living a
| quality of life that my loved ones are comfortable with. It's a
| hard balance.
| sanderjd wrote:
| You should have kids - never wonder what to do with your money
| again! :)
| looseyesterday wrote:
| Not enough people critically question their day-to-day spending
| and life assumptions.
|
| I find the easiest way to save money is to avoid competition.
| Everyone wants a 2 bedroom house within commuting distance of
| work. I bought a 1 bedroom flat within walking distance of work,
| converted the kitchen into a second bedroom (moved kitchen to
| living room), couldn't happier.
| halhen wrote:
| Picking a neighborhood where you are relatively well off seems
| to usefully calibrate those assumptions. Maybe it has to do
| with status, which is relative.
|
| Earning well and living in a regular middle class neighborhood
| of teachers, carpenters, and office workers, I don't feel
| stressed about keeping up with the Joneses I'm surrounded by. I
| can afford enough relatively (to my surroundings) nice things.
|
| My social circle is not full of wealthy people, so living in a
| regular middle class area is also not low-status. I also feel
| like that the kids feel more secure about the things they do
| and have than they would be if they were always falling behind
| their friends, doing and having exactly the same stuff.
| looseyesterday wrote:
| Yes living below your means is a key to happiness. Too many
| people end up pushing what they can afford without planning
| for tougher times.
|
| I think one of the biggest positive impacts on me was my
| parents deciding to raise me until 16 in a developing
| country. They had a middle class income, but my country of
| origin they could afford to put me in the best schools and
| pay for plenty of out of school activity. That changed my
| mindset of what was possible. By the time I came back to
| Europe, I went to a free school, but performed much better
| than my peers, I believe mostly due to my own expectations
| for my future.
| moonchrome wrote:
| And how are your kids doing?
|
| Who's living in a 2 bedroom house solo - that sounds like a lot
| of maintenance for a lifestyle where you don't need to be
| spending your time at home.
| looseyesterday wrote:
| I grew up an equally-sized 2 bedroom in a city centre and its
| totally fine. Neighbours have kids in a similarly sized house
| and are not planning on moving. They are wealthy asians with
| apartments being standard in their part of the world. The
| American obsession with terraced housing is bad for the
| environment and highly inefficient.
| have_faith wrote:
| > terraced
|
| Do you mean detatched housing? (which takes up a lot more
| space than terraced). I live in England though where small
| compact terraced housing (relative to the US) is very
| common in the housing stock.
| rofo1 wrote:
| > All success is simply relative to someone else - usually those
| around you. That's important for spending money, because for so
| many people the question of whether you're buying nice things is
| actually, "are your things nicer than other peoples' things?" The
| question of whether your home is big enough is actually, "is your
| home bigger than your neighbor's?"
|
| This is pathological behavior. Unfortunately, it's ingrained in
| humans. We are improving the world in a faster-than-ever rate,
| and the objective difference between wealth classes was never
| lower than it is now. Not even remotely close. (see the book
| "Factfulness" for some interesting data)
|
| Yet due to the way the world stopped "being huge", due to social
| networks and everyone being "approachable" (low degree of
| separation or whatever), the level of envy is at absolute
| maximum. This problem was always present in humans and is perhaps
| the primary reason (well, if we can make the jump or at least
| connect envy to evolutionary pressure for procreation) we have
| achieved so much in this world. Not knowing when is "enough" is
| unsolvable problem, even though philosophers wrote thousands of
| books on this topic.
|
| People cannot stop being envious even if it leads to unhappiness,
| almost always.
|
| For myself, if I don't have to worry about bills, buying healthy
| food, having shelter and I don't have to work 14 hours a day, I
| consider myself on par with anyone in the world money-wise.
| devops000 wrote:
| My idea is to spend as an average person would.
|
| I increase my lifestyle only spending interests from
| bonds/dividends. In this way I have a better life as my net worth
| increase but not at the same rate.
|
| So if the risk free interest rate is 5%, I don't only increase my
| lifestyle of 1$/y for every 20$ earned.
| mouly wrote:
| I agree with the point that there is a difference between a
| savings mindset and investment/growth mindset. One should invest
| in physical and mental health.
|
| But a lot of the advice seems like narrative fallacies
| 6stringmerc wrote:
| Just finished living with a financial and emotional hoarder.
|
| When a person groans about spending $1,000 on high quality
| Michelin AS4 tires for an appropriate car, they are being
| obstinate. Money is to purchase things for life, not the purpose
| in life. It doesn't take a lot if one sets expectations and
| standard of living appropriately.
|
| Personally I've learned the corporate rat race is really
| detrimental to my handicap so I'm going to file for disability
| and continue to participate in society with my arts and letters.
| It's not quite UBI but it's close enough for my purposes. I grew
| up in a wealthy household - again, came up poor and seem obsessed
| with "investments" and "security" instead of enjoying the food
| and experiences those monies can buy - so I'm over it.
|
| Yes it's nice to have nice things. I have some maintenance
| expenses I understand but can be flexible about in the short and
| long term. Strings, new music, alcohol and cannabis, it's all
| pretty low-key and low rent. The only thing I really need as a
| basecamp is electricity, air conditioning, indoor plumbing, food
| access and storage and cooking, and connection with the outside
| world by way of phone, car, or internet. That's all. Everything
| else is basically static and for whatever reason, it's getting
| more expensive.
|
| "The only way to win is not to play" holds pretty true to me when
| it comes to US financial system and navigating the aspects of
| "real" property and life versus synthetic engineering for the
| sake of jargon. Source: Worked Wall Street muni bonds,
| derivatives, arbitrage rebate, and asset management ~$4B.
|
| Also anybody have the address to Jack Welch's grave? Gonna get
| loaded like a freight train and give him the Thomas Kinkade-Walt
| Disney treatment. What a horrible human being.
| mouly wrote:
| I agree with the point that there is a difference between a
| savings mindset and investment/growth mindset. One should invest
| in physical and mental health.
|
| But a lot of the advice seems like narrative fallacies.
| SeattleAltruist wrote:
| Brilliant article, thank you. This should be a classic. Ranks up
| there with wisdom such as 'don't spend your youth pursuing wealth
| and wealth pursuing youth.' PS one of the best ways to develop a
| healthy relationship to money that I've found is to absorb
| Buddhist teachings on how to avoid the suffering caused by
| grasping after things. Fixes most all forms of money-inspired
| unhappiness.
| kerrsclyde wrote:
| My three children all have completely different attitudes to
| money despite being very close in age and being raised together.
| Two spend freely now they earn their own money, my middle
| daughter saves almost all she earns and knows the price of
| everything.
| BLKNSLVR wrote:
| I have a feeling that the friends your children make have an
| underestimated influence on their behaviours, and what they
| consider worthwhile to spend time and money on, from their mid-
| teens until they work out their own life plan (which is
| sometimes never).
|
| The lessons parents can teach them about life only seem to be
| learnt if they're relatively immediately applicable. I didn't
| care about 'saving' until well after I realised I was earning
| enough to be worth saving - in my early 20's. Prior to that, I
| never had any money worthy of 'considering my future' beyond a
| new skateboard deck or fashionable pair of shoes so, you know,
| take your advice about saving for the future and stick it
| because it doesn't apply here.
| tehCorner wrote:
| > Frugality inertia: a lifetime of good savings habits can't be
| transitioned to a spending phase.
|
| Coming from a poor family and knowing the hard way the issues of
| not having money I've been obsessed with saving money since I got
| my first paycheck 8 years ago and I always thought "at the point
| I would earn current salary + x I will start enjoying life more
| and stop worrying about money" but that never happened.
|
| 8 years have passed and I still have the same thoughts despite
| earning 15 times more and having no financial problems, my mind
| just makes it very difficult whenever I have to spend money on
| something.
| AnimalMuppet wrote:
| I don't know that I have a problem spending money. I just don't
| _want_ things.
|
| Take cars, for instance. I can afford to buy a new car. My
| current car is old enough to have its own driver's license.
| But, why? It runs all right. It's solid. It has literally
| _never_ let me down. I don 't worry about it getting a dent. I
| don't worry about taking it on decent unpaved roads. Sure, it
| will die eventually, but until then, why would I replace it?
|
| Or take vacations. I _like_ vacations. But I don 't need to fly
| to Vegas and stay at the Encore and drop a few thousand at the
| tables in order to feel like I had fun. I can have fun camping
| in the Mojave and never pay a dollar for a motel room. (I mean,
| I _can_ see the point in a really nice hotel room from time to
| time...)
|
| Or take eating out. I like good food, at least once in a while.
| But a good medium-to-high-end steak place is as far as I want
| to go. These Michelin starred places? I look at their menus,
| and I don't see anything that I actually want to eat.
|
| For me, it's not that I'm still worried about money. It's that
| I don't have much of a taste for expensive things.
| Viliam1234 wrote:
| Yeah, similar here. It seems to make some people angry, it's
| like if I have money, it is my moral duty to spend it all
| immediately. But the things I want are surprisingly cheap.
| Even computers, were crazy expensive 30 years ago, but now
| they cost almost as little as books.
|
| The expensive food, I think is not about the taste, but about
| getting dozen tiny pieces of food, each of them has a French
| name, and you always wait 10 minutes until they bring you the
| next bite. You pay for the feeling that many people have
| spent a lot of time and work preparing your food, even if the
| result is not really better. Probably other people enjoy that
| feeling; I don't.
| CraigJPerry wrote:
| It's possible it's not a problem, I'd be inclined to give
| yourself a break. A lot of the "essentials" we're supposed to
| splurge on (big house, cars, expensive food, etc) are often
| overrated when you look at it from a "does this make my life
| better" lens.
|
| Investing in yourself - be that skills or life experiences - is
| worthwhile but you can do even that with a frugal slant.
| mythhouse wrote:
| You made an unconvincing point by reducing money to
| stereotypical 'expensive cars' . What about going on ski trip
| while your kids are still young and having a magical and
| memorable moments in life.
| unity1001 wrote:
| > What about going on ski trip while your kids are still
| young and having a magical and memorable moments in life.
|
| That's a necessity.
| robocat wrote:
| > What about going on ski trip while your kids are still
| young and having a magical and memorable moments in life.
|
| For trips, talk to friends from any background about their
| cherished memorable trips from their childhood and try to
| repeat what worked. Figure out what caused those childhood
| trips to be memorable. It is rarely expense from what I can
| tell.
|
| Expensive trips are often social status signalling. Kids
| don't need expensive trips, they won't appreciate the
| sacrifices which could be frustrating, and you really need
| to be able to afford follow-on trips if it turns out your
| kids love it too much!
|
| For one of my close friends, the family went camping, which
| was about the cheapest way to go away when I was young. She
| still loves it and she just bought a new tent (she is
| mostly careful with money, so even buying a tent is a
| notable purchase). She took her kids camping, so the good
| experiences were shared across generations.
|
| Disclaimer: skier. But my childhood skiing was cheap club
| fields, with cheap gear. Working bee days at the club to
| work on the club field for a few days each summer. Social.
| Affordable for a working class family. New Zealand had more
| of an egalitarian frontier mentality to fun.
| curation wrote:
| Similar. I left home at 15 made my own way. I saved 95% of what
| I made - drank powdered milk, worked 7 days a week for 15 years
| multiple jobs, side jobs (flip houses, production company). But
| I set a goal so, unlike my grandmother, who never stopped
| fearing the return of the Great Depression, I could stop. I
| retired in my mid-thirties and now I study languages and write
| and travel, but I don't buy stuff. Maybe if you set an
| achievable goal it will help.
| brailsafe wrote:
| Do you feel satisfied in that series of decisions? This was
| something I started doing in my twenties, but am glad it
| didn't continue, despite having some major financial
| difficulties now (though I don't have much control over that
| anyway). Do you feel like your travel experiences offer you
| more substance than any possessions would, and do you feel
| like language learning is a fruitful use of time?
| luxurytent wrote:
| This is me and I struggle with it on a regular. We are quite
| comfortable (on my single salary I can cover mortgage, private
| care for my kids, and good food), but I feel behind -- because
| I came from a poor family who scraped on a regular. My parents
| still work their fairly simple factory jobs as they need to pay
| off their debts (albeit they are below 65)
|
| What I'm trying this year is ensuring I can allocate a certain
| amount to savings (automatic withdrawal) and then treating the
| leftover money as "free to spend"
|
| I don't know if this will work, as once I see that excess cash
| I think "Ah, let's use this to pad the emergency fund..." but I
| need to begin training the mind to be more comfortable with
| spending.
| SassyGrapefruit wrote:
| Good luck with that "Free to Spend" category. It just turned
| into emergency fund 2.0 for me. One thing that allowed me to
| spend some money is the idea of diversifying my savings by
| purchasing assets. Rather than let Emergency fund 2.0 sit in
| an account as cash burning a hole in my pocket why not buy an
| asset. This could be an apartment, a collectible, a storage
| facility, etc. For me this feels like saving and spending at
| the same time.
| malnourish wrote:
| I *strongly* encourage you to pick a budgeting program and
| stick with it. I say this as someone who comes from perhaps
| more meager means than most in this thread and I now am in a
| similar position as you.
|
| I use YNAB but I'm sure any will do. Essentially, I give
| every dollar a "job", whether that is to be the next car
| insurance payment 6 months from now or for our vacation fund.
| I know what money I have and where it's going. I have tracked
| every single dollar I've spent for about the last 10 years,
| less some petty cash.
|
| I still have financial insecurity worries that likely stem
| from my childhood and I doubt they'll ever fully go away
| (see: people who grew up during the Great Depression), but I
| can allow myself to spend now and do so confidently.
| mythhouse wrote:
| > for our vacation fund.
|
| Well most people with the mentality GP is describing cannot
| get themselves to do this in first place. not sure if this
| is a budgeting problem. Ppl save obsessively because they
| think they might need that money for an unavoidable future
| expense even though they can't quite tell what that might
| be.
| luxurytent wrote:
| I think you're right. I've mostly stayed away from
| budgeting apps. I'm already quite busy with work and
| parenting two young kids, but it may be the best way to
| train the mind. Thank you
| wtfmcgrill wrote:
| I have the same problem, I don't track my spending but
| have money automatically plowed into different
| investments and am generally frugal. Been looking into
| money manager ex and home bank as foss softwares. Mint,
| quicken and ynab are popular but I don't want a cloud
| solution where I have to pay a subscription fee, I mostly
| just want transactions with labelled data so I can see
| where the money goes.
| sanderjd wrote:
| Personally, I realized that I was wasting a lot more in
| opportunity cost by trying to make all the various non-
| subscription solutions work for me (and writing my own
| for awhile), and I'm much happier now paying ynab a
| yearly pittance instead of spending all that time on
| something without much actual value to me. (And by
| switching to a subscription model they've been able to
| improve the product much more quickly than they were with
| the classic version.)
| sanderjd wrote:
| I also work a lot and have two young kids. Going through
| and updating the budget each week or two is one of the
| main things I do to relax :)
| toast0 wrote:
| You don't have to spend the "free to spend" money, and you
| shouldn't feel bad for not spending it.
|
| Maybe collect the unspent amounts into an "Emergency Fun"
| fund, so you can dip into it if you have a crisis related to
| fun (gaming device breaks, see something really cool that you
| want to have or do, etc)
| holy_eggplants wrote:
| My parents are similar. They had a cash/coin business and would
| count everything by hand. My mom developed shoulder/neck
| problems. I repeatedly asked them if I could buy them a bill
| and coin counter. Eventually I just bought them.
|
| They thanked me and wished I had done it 5 years sooner.
|
| One problem is that my parents treat all spending the same -
| whereas I think spending to invest in their health or quality
| of life is a no brainer.
| MaurizioPz wrote:
| Ramit Sethi has good advice on learning to spend, geared
| towards those that "made it" but can't escape past habits
| mythhouse wrote:
| And What is this advice. I couldn't search for it with the
| keywords in your comment.
| darkerside wrote:
| It was a great experience for me traveling to a foreign land as
| an adult. One of my most valuable lessons came as the trip
| began to wind down, and I was left with a medium amount of
| money in that country's currency. I suddenly realized that this
| money was essentially going to become useless the moment we
| left. It wouldn't be enough to justify a trip to the bank to
| convert it, especially with the fees. I started buying anything
| I wanted, and some things I didn't. Anything I could spend this
| useless money on would be better than taking it back home with
| me.
|
| As you might realize, there's quite a parallel to our lives
| here. At some point in your life, and it might be now, and it
| might not be until moments before the end, you will realize
| that all this money is useless to you. You'd trade literally
| all of it for another moment that matters. Do you want to have
| that realization when it's too late, or do you want to get
| started on that now?
| sokoloff wrote:
| To extend your analogy: All of us will return from that
| foreign land at some point.
|
| Almost all of us will leave behind other traveling companions
| we care about who _can_ use that money.
| svilen_dobrev wrote:
| someone said : all-life-rich person can learn being poor ; all-
| life-poor person cannot learn being rich..
|
| my granddad would pick the best wooden board and cut some small
| piece he needed from the best part of it - even if in the
| middle.
|
| My dad would pick the most-matching-possible board at-hand and
| cut some corner of it. Saving the rest for something..
|
| i am torn between the two..
| mythhouse wrote:
| hey are you Indian by any chance? I've noticed this with my
| indian family and friends. They don't think they are any
| downsides to saving too much and only upsides. There isn't even
| a realization that there is something wrong with saving too
| much.
| twodave wrote:
| My wife and I have accumulated a few overall principles about
| money over the years. What's interesting is how they have played
| out over time. Here are a few of them:
|
| 1. Money and debt are amoral financial tools. It's important to
| be smart about how we use these tools, but neither money nor debt
| is evil or all that valuable in the moral sense. This is
| especially important for us, because our conservative background
| has pretty much taught us from childhood that money == good and
| debt == bad.
|
| 2. Treat money like it belongs to someone else (in our case, as
| Christians, we acknowledge it, like everything, belongs to God,
| and we try to spend in a way that honors the responsibility he's
| given us).
|
| 3. Always pay off the credit card at the end of the month. When
| we got married, I got my first credit card and set the automatic
| payment to 100%. I only made $40k/year back then, but we have the
| same rule today, even though our spending power is 5x what it
| was.
|
| 4. Retirement savings. This one's obvious, but most couples can
| save a combined $13k per year in Roth accounts that can grow tax
| free for your lifetime. Maximizing this as early as possible in
| life is extremely important. As your income grows, your next goal
| is to maximize other vehicles like a 401k. Don't make your kids
| take care of you financially later in life.
|
| 5. Your kids won't be around forever. This doesn't sound like a
| financial principle until you start thinking about all the trade-
| offs having kids presents you with. For instance, we're more
| likely at this point (with 4 kids 6-13 years old) to put in a
| pool than we are to redo our kitchen. And we're more likely to
| take on some manageable debt in order to make improvements to our
| home or give our kids experiences that normally we would take the
| time to save up for.
|
| Edit: forgot an important one
|
| 6. Spend more to buy things that last. Especially if you live in
| a wet climate. I live in Florida, where everything rusts and
| rots. 4-5 years ago, instead of buying another gas grill that'll
| just rust in a year, I bought a Kamado-style grill. It's still in
| perfect shape, and I use it more often as a result. When we
| bought patio furniture in 2020, we spent extra to avoid natural
| wood, which takes regular upkeep and, again, eventually rots
| anyway. It's still in perfect shape. When we replaced our rotting
| exterior doors/doorframes, we went with an industrial PVC
| material. I'll never have to worry about any of those things
| again.
| EVa5I7bHFq9mnYK wrote:
| Spending is tiresome at old age. Traveling, buying new things,
| even eating out requires effort. But recently, I found an easy
| and very satisfying way of spending money - donating to U---ne.
| eternityforest wrote:
| Rich people always love to say $3 questions don't matter.
|
| But avoiding a latte is how you save a few hundred dollars a
| year, instead of not being able to save at all. It won't buy you
| a house, but it will certainly let you hire a Lyft if you have to
| come in at some crazy time, and you might save your job because
| of it.
| IanCal wrote:
| A fun article.
|
| > If you develop an early system of savings and living well below
| your means - congratulations, you've won. But if you can never
| break away from that system, and insist on a heavy savings
| regimen well into your retirement years ... what is that? Is it
| still winning?
|
| Those two things aren't quite connected though.
|
| If you build a good life living below your means, you can
| absolutely carry that on into retirement (which you get to do
| sooner) and that's still winning.
|
| The disconnect is in having two distinct phases - one where you
| are saving and one where you finally get to be free and spend. If
| you have this I wouldn't count it as winning, for precisely the
| reasons the article explains.
|
| I think this is often reflected in peoples unhappiness either
| within the FIRE community or those looking at it from outside.
|
| > 5. The joy of spending can diminish as income rises because
| there's less struggle, sacrifice, and sweat represented in
| purchases.
|
| This, imo, makes it all the more important to avoid equating
| being paid with having value and try and make the money side
| blander. Find this type of joy in other pursuits, the fact you
| can't just _buy_ being good at the guitar makes your progress
| more valuable. You can also think about how transactions in a
| pay-to-win game reduce the value of your effort (is beating this
| really only worth 50 cents?).
|
| A relevant quote from Arnie:
|
| > A well-built physique is a status symbol. It reflects you
| worked hard for it; no money can buy it. You cannot borrow it,
| you cannot inherit it, you cannot steal it. You cannot hold onto
| it without constant work. It shows discipline, it shows self-
| respect, it shows patience, work ethic, and passion. That is why
| I do what I do.
| EVa5I7bHFq9mnYK wrote:
| I always wondered - what rich people did before Instagram? What's
| the point of splurging without getting likes?
| ThinkingGuy wrote:
| Newspapers had the 'society pages.'
| iammjm wrote:
| Two money aspects that I find useful, which weren't mentioned in
| the article:
|
| Price per use: if I buy X, how much/often will I use it vs. it's
| price
|
| Time sacrifice: considering my current hourly wage, how many
| hours of my life do I need to spend in exchange for this item?
| imtringued wrote:
| The time sacrifice thing doesn't work in practice because the
| division of labor has a very big expense called taxes.
|
| If you do things yourself then you avoid the tax burden. But if
| you decide to let someone else do the work you have to pay VAT
| and income tax.
| grecy wrote:
| When quoting your hourly wage deduct income tax and all
| expenses you incurred to earn it - commuting, meals, clothes,
| etc.
|
| You'll see suddenly your hourly wage is not so high, and it a
| huge number of hours of your life for that tv
| have_faith wrote:
| I think these concepts can be very dangerous if applied too
| liberally. In both examples you need to have a rough
| understanding of how happy the thing might make you feel, or
| how much "value" it's going to provide. I can buy A for PS50 or
| B for PS100. B is in some measurable way "better" than A, but I
| can't quantify how much. B being better might make me use it
| more? it might also be used equally little and be a waste of
| money.
|
| Growing up poor and becoming comfortable financially as I grow
| up has only made these sorts of assessments much harder I've
| found.
| brownrw8888 wrote:
| There was a lot of depression-era frugality and Macgyver-level
| fixes in my home growing up. Not necessarily a bad thing, but I
| feel as if I've unwittingly internalized certain habits ;)
| paulpauper wrote:
| It's too easy to overspend. It's effortless to give people money.
| It's much harder to earn money. Hence, being frugal is a good
| idea generally.
| mym1990 wrote:
| Especially in the day of fairly abundant credit where one is
| often spending against future income and not what is currently
| in the bank.
| lazybreather wrote:
| Lower middle class kid to now a slightly upper middle class
| person here. Migrated from small towns to cities. I think this
| falls into majority category.
|
| Wow! I don't experience even one of those points the author
| mentions. In fact quite the opposite. It is unsettling to feel
| even mildly rich or show the world that I am doing well. Maybe I
| am not in the majority after all. Or the article is so very
| rooted in western demography.
| sanderjd wrote:
| Yes. This is my experience as well. I don't really relate to
| any of this status seeking through wealth stuff.
|
| I'm curious where you're from. I'm from a small town in the
| midwest. I live in a cosmopolitan urban area now, but I always
| wonder if this sort of thing is a coastal or city culture that
| I still don't, and maybe never will, understand.
| sokoloff wrote:
| > Frugality inertia: a lifetime of good savings habits can't be
| transitioned to a spending phase
|
| I think a lot of financial planners start from a base assumption
| that their clients will be happiest if they spend their
| accumulated wealth. That's not true in my case (at least as far
| as I can self-analyze).
|
| Whatever we don't spend isn't lost potential for us, but rather
| is future potential for our kids. Taking only the financial sorts
| of potential, some of that is embodied potential (money spent on
| education and health); others are concrete figures on finance
| statements.
|
| We _could_ spend more and seek to "have the check to the
| undertaker bounce", but it's a lot less stressful to my mind to
| have a low 7-figure balance be the much more likely ending net-
| worth, giving us a cushion for our later years and knowing that's
| enough to be helpful but likely not enough to be detrimental to
| our kids.
| j7ake wrote:
| Yeah it's weird. The optimization function seems to maximize
| the spending rate from retirement age to death, which happens
| of course when you hit $0 at death and save as much as possible
| before retirement.
| imtringued wrote:
| >Whatever we don't spend isn't lost potential for us, but
| rather is future potential for our kids
|
| That's extremely lazy. If your children follow the same pattern
| then no one will ever benefit. It was all for nothing.
|
| So your kids will spend the savings but when will they spend
| those savings? After your death when they are in their 40s and
| 50s and long past the point where they need your help or while
| they are still young and you spend time with them?
| toast0 wrote:
| Just because nobody spends the money doesn't mean nobody
| benefits.
|
| If I've got a bunch of money in my account that I'd rather
| not spend, because I want to keep it for a rainy day, I can
| still spend the dividends. I can also spend more of my
| income, if I'm satisfied that the bulk amount is enough that
| I no longer need to save more for emergencies. I can also be
| less worried about increasing or even maintaining my income;
| so I can find a job that makes me more happy instead of one
| that makes me more money; or work less hours or retire
| earlier.
|
| Having a target dollar amount for savings and not just
| increasing it without reason does help maintain perspective
| though. In my mind, from a very priviledged place, I'd like
| to be able to pay for long term memory care for several
| years, even in the face of a market crash and high inflation.
| Anything more than that, is kind of silly to retain; but I'm
| still frugal, so spending freely isn't spending frivalously.
| sokoloff wrote:
| It's a matter of capacitance and safety against being broke.
| Being broke and needing services at age 95 is a pretty bad
| spot to be in. Dying at 85 instead of 95 and, as a result,
| dying with $1-2M in assets isn't nearly as bad.
|
| If the present is any predictor, I'm sure we'll spend
| adequate time and other resources (financial and not) with
| them while we're alive, but in order to minimize the chance
| that we'll become a financial burden to them, we're very
| likely to live in a way that will unavoidably present them a
| surplus at the end.
|
| If that's lazy, then we're proudly lazy, and we come from a
| long line of lazy people.
| sanderjd wrote:
| Check in with your kids about this. I'd rather my parents spend
| what they have saved. I don't need or really even want them to
| pass anything on to me. I'd much rather they enjoy their
| retirement more, pay for more visits to their grandchildren,
| and have lots of interesting stories and about what they've
| been doing to tell them.
| sokoloff wrote:
| If we knew when we'd die and how much care would cost from 80
| until death, that would be easy. It's unknowable and my
| wife's family has exceptional longevity in most of her
| genetics. She could realistically blow out a Roman numeral C
| candle on a cake. Or she could die at 75... One set of my
| grandparents passed quickly in their 60s; the other in their
| 90s (with over a decade of independent then assisted living
| then years of memory care)...
| NotYourLawyer wrote:
| > If you dig into it, I think you'll see that a disproportionate
| share of those with the biggest homes, the fastest cars, and the
| shiniest jewelry, grew up "snubbed" in some way. Part of their
| current spending isn't about getting value out of flashy material
| goods; it's about healing a social wound inflicted when they were
| younger.
|
| I thought this was just called nouveau riche.
| darkwater wrote:
| Loved this article, very spot on.
|
| > Frugality inertia: a lifetime of good savings habits can't be
| transitioned to a spending phase.
|
| This is my first thought when faced with the FIRE community, and
| even when such a thing didn't exist yet, there were always people
| like that. A personal example: my uncles. They lived a very
| humble life, no kids, had a total of 2 small cars in the 30 years
| I knew them, went 15 days on holidays 60km from home. They died
| with over 600k euros just in savings (plus 2 apartments). Does
| this make sense?
| elefanten wrote:
| Depends entirely on what you value. Some speculative
| propositions:
|
| -Some find less value in material things and worldly
| experiences as they age, so the expected happiness return on
| splurging can decline.
|
| -Some find living by a principle of some kind (eg- humbleness
| and frugality) to be very fulfilling in itself.
|
| -Some value being relatively protected from risk and
| misfortune, and ultimately there's no upper limit on risk
| insulation.
|
| -Some highly value being able to leave something behind to the
| people, organizations or causes that they love.
|
| -Finally, these motivations can change over time and act in
| concert to shape the story in ways that might not be apparent
| when you just examine the visible surface facts.
| harvey9 wrote:
| Depends. Do you think they were happy with their lifestyle?
|
| I have a friend who is happily collecting his pension, has
| plenty of cash in the bank, but still works because he chooses
| to. He's a bit less frugal than your uncles but still lives
| well below his means.
| darkwater wrote:
| Happiness for sure is a personal concept but I think they
| were in general on the "we came into these lives to suffer"
| boat. So, I think they were not "happy" for a healthy
| definition of happy, but they probably not even interested in
| being happy.
| Jensson wrote:
| > I think they were not "happy" for a healthy definition of
| happy
|
| Being happy with what you accomplish and do instead of
| trying to be happy through consumption and excess seems
| very healthy to me.
|
| What do you think is wrong with that?
| darkwater wrote:
| It would be a bit too long/detailed/personal answering
| that, but IMO a healthy definition of "happy" involves
| using the money you earn to make your life easier most of
| the time, during different phases and under most
| situations. For example, living in a house that is
| physically loosing pieces, that should be fixed to avoid
| problems, it will not generate happiness through
| consumption, but it will relieve you from stress of
| possible bad consequences. Not doing that when you do
| have the money indeed, it's not healthy.
| Jensson wrote:
| Spending money on those things takes a lot of effort
| though, maybe they just had ADHD and didn't want to think
| about all the ways they could spend money?
|
| Typically it is much easier to not spend money than to
| spend money. A trip to a foreign country is more effort
| then a local vacation, an expensive renovation is more
| effort than just living as is etc. A big home is more
| effort to clean, a big yard is more effort to manage, a
| big car takes more work to keep reasonable etc.
| Jensson wrote:
| Yes, money in the bank means you don't worry, that is by far
| the most impactful part of money. Spending more doesn't make
| you happier but having money so you don't have to worry is
| huge.
|
| Ads try to tell you that you will be happier if you spend
| money, but if you learn to ignore those signals you can be
| perfectly happy on very little.
| ozim wrote:
| That and the not-fun part where you really don't have a clue
| if you are going to die when 60 or 65 or maybe 90. Then you
| also don't have a clue if you become a burden on your family
| for years - where that money would be used to take care for
| you - or you just don't wake up one day without means to use
| any of the savings.
| burgerzzz wrote:
| I've sort of adopted the mindset that money comes and goes and we
| should spend it on things if we reckon we will get enough value
| out of it. Now, I'm having a daughter soon and feel a bit
| immature about it all despite earning a decent salary, but I
| can't help not wanting to feel like a slave to money especially
| knowing how many people with far less get by just fine.
| IanCal wrote:
| > and we should spend it on things if we reckon we will get
| enough value out of it
|
| This is totally true, but I think you just need to broaden what
| you mean by getting value out of money. Money saved provides
| safety, time, and options.
|
| Money saved is just money to be spent in the future.
|
| > but I can't help not wanting to feel like a slave to money
|
| Once you're in a regular pattern, you're not. I have regular
| things that go out, a budget under my income and don't need to
| check on things all the time. Not spending everything I have
| makes me _less_ tied to income and outgoings.
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