A few days ago, I got an email from a reader named Kate who shared how her attitude towards money has changed over the years. She mentioned that in the past, she would have spent a lot more money than she does now, simply because she would have considered so many more things to be needs rather than wants. When we compare ourselves with the people around us or let ourselves be swept along with current trends, money has a way of disappearing rather quickly. Here’s what Kate had to say:
I think you could do a whole post on saying NO. This past week and a half I have said no to :1. Over priced CSA. (cheaper to go to farmers market and get produce) $4002. Travel soccer for two daughters $400.3. Summer camps $500.4. Preschool $30005. Camping weekend $2006. Gas on all the above activities has to be over $600The old me would not have even realized that I was making choices on these things. $5000 and i would not have batted a eye 2 years ago. I considered them a must have because my friends were doing them. It was REALLY hard to walk away from preschool and travel soccer. Yet, I can’t afford them. I think we confuse paying for things with being able to afford them. Yes, I can pay for the $270 a month for preschool. (Plus then I am also spending money for fundraiser, class parties, gas, teachers gifts, etc.) But I can’t afford to pay for them and meet my financial goals or my goals to create a peaceful environment.
I love what she says about confusing our ability to pay for something with really being able to truly afford it. Think about houses and cars that are usually purchased with a payment plan. The most important number is the total price – including interest – that you’ll pay for the item. Thinking in terms of whether you can make the monthly payment is a recipe for being in debt forever and for spending all or nearly all of what you earn each month. Kate notes she does technically have the money to pay for those items. But I love her thought process when she says that she can’t afford to pay for them AND meet her financial goals or her goals to create a peaceful environment.
A peaceful environment is a huge part of health and happiness. And living below our means – often by saying “no” to lots of things that people sometimes assume are necessities – is a very good step towards creating a peaceful environment. Knowing that you have money in the bank to get you through a tough patch (because tough patches will come up – it’s just a matter of when) is a very calming feeling. Knowing that you don’t really need that much money each month to cover your expenses creates a sense of peace.
In order to determine if we can really afford something (as opposed to whether we’re simply able to pay for it), we have to look at our priorities first. What are your most important financial goals? For us, paying off our mortgage and having a solid emergency fund are far more important than any other wants we have. So those come first each month, before any other spending. If we were to just look at our total income and then spend it on whatever we wanted during the month, there might not be enough left to meet our most important goals. Everybody has different “most important goals” but the key is to make sure that you’re spending your money in harmony with those goals rather than at odds with them.
Thanks for sharing your thoughts Kate!
This is really great food for thought, especially as I start to (publically) track what I spend on my kids for one year. Just because I can doesn’t mean I should.
I find that telling my kids or myself, “I do not choose to spend my money that way,” to be a much more powerful sentence than “I can not afford that,”
By the same token, I say,” I do not choose to spend my time that way,” rather than,”I don’t have time to do that.”
Bingo! This is so dead on.
This is an excellent perspective and message. I am going to pass this on because I think there needs to be more talk about how we choose to spend our money, rather than how we are told to spend it by society, marketing, peers, etc. I wish I had learned this lesson decades ago.
I really like this distinction. You can even take it to the next level and say that being able to pay for something with debt means you can’t afford it. It seems there’s always money to be spent (even if it’s not our own money) so we really should ask ourselves if we can afford certain things.