I have always been a fanatical saver, ever since I was a kid. I remember a wooden box I made in an after-school woodshop class. It was about eight inches high and five inches square. I fitted it with a hasp and a sturdy padlock, and I kept all my allowances, spare change and other money I came across in this box. Always saving, never spending. Later, I graduated to a wonderful institution that did so much to shape my attitudes about money, the Young American’s Bank, where I maintained an account until I became an adult. When I started working, I began keeping a spreadsheet where every week I would enter the balances on all of my accounts: checking, savings, brokerage, retirement accounts, credit card, etc. Over time, my financial life has grown more complicated, and the number of accounts has increased, but I still track the balance in each account every week.
All that those numbers in my spreadsheet or a brokerage statement represent is foregone or delayed consumption. I could have spent all that money as I earned it, but the essential reason that we save is so that our money can grow and fund future spending. The more we save, the faster our wealth compounds, and the more we can have available to fund our future consumption.
I am still a careful saver, and I write and talk a lot about the importance of saving and investing, but here is my secret: I also love stuff. I love well-made and beautiful objects. I have always felt that such things can enrich our lives, and that our material goods really can be an expression of values, taste, personality and aspirations. I may be too careful a saver, but I do spend money on the things that I love and bring me joy.
The topic of today’s post is how to spend money in a way that magnifies the joy of our purchases. That’s a highly subjective endeavor. The things that bring us joy are unique to each of us, so I’ll try to outline some basic ideas that I use as a framework for my own spending. I think that we should all be more conscious spenders, both because it would save us money, but also because it might help maximize satisfaction from our spending.
1. Favor experiences over things. This is an obvious one, because you hear it a lot. I generally agree with it, but I think it gets overused by would-be minimalists who minimize the real satisfaction that can come from beautiful objects. But, generally, it’s a good rule. I expect that the best memories at the end of life will be of the things I did, not the things I owned.
A few weeks ago, I went on a golf trip with my brother. We played some great golf, ate some good meals and were able to spend time with our parents. Interludes like this, escapes from the everyday routine, spending time with family and friends, make life so rich.
2. Buy “permanent goods”. My wife teases me that I never buy anything unless I expect it to last forever. This is not strictly true, but I do favor things that I know will last a very long time. Too much of our consumption is on things that are basically disposable. I have made a conscious effort to reduce mindless consumption of things that will end up being disused, obsolete, worn out, or out of fashion. The effect of this is that I take a very long time to make a purchase. I will exhaustively research things before buying them to make sure that they are the “best” in terms of durability, aesthetics, etc. This takes effort, but I wind up buying fewer things I regret later.
I try to find things that will wear in, not wear out. I like things that look better with use and acquire a good patina. A few years ago, I decided I was done buying furniture at Ikea. My wife and I have a small, but attractive collection of vintage pieces which suit our taste. It’s amazing how much better old furniture is compared to the made-in-China fiberboard shit.
3. Don’t skimp on true essentials. Every week, we go to a farmer’s market to buy the bulk of our groceries. It’s marginally more expensive than buying produce at the grocery store, but for us the benefits outweigh the additional cost. The produce is organic, and we’re supporting local small farmers. Also, when it comes to food, I’m willing to pay more because it’s something that’s going into my body. Quality matters.
4. Know when to buy the expensive thing and when to buy the cheap thing. Price is what you pay, but value is what you get. I have never understood how commoditized goods like t-shirts can sell for so much more than they obviously cost to produce. This one costs $835; this one costs $15. I cannot believe that the former has $820 of excess value compared to the latter. The purpose of branding is to convince you that some products contain more value than other, similar goods. The challenge for consumers is to accurately determine when to buy the expensive thing and when to buy the cheap thing.
5. Avoid buying things that are better off rented. This rule has become more interesting over the past few years as new ways of consuming media have become prevalent. In college, a friend of mine had two of his dresser drawers filled with DVDs. He must have had almost two hundred. Now, with practically every movie or TV show you could ever want to watch available via streaming, it seems silly to make a big investment in owning a large library of physical movies or music. Sure, there are exceptions to this. Last year, revenue from vinyl records exceeded that from CDs for the first time in 34 years. Music enthusiasts will tell you that vinyl sounds richer, and there is an undeniable appeal to the ritual of playing a record, watching it as it spins, and enjoying the album artwork and liner notes. Likewise, physical books possess an aesthetic characteristic that a kindle does not. Again, sometimes ordinary physical objects can bring us joy.
A few years ago, I got rid of my own collection of DVDs. They were in a box in the closet, and I no longer owned an actual DVD player. Similarly, I try to buy fewer physical books than I used to. I still love books as objects, but I have run out of space for the time being. I do make use of the Kindle’s ability to download books from the library, as actually owning a digital copy of a book has less appeal than owning the physical copy.
Having a framework for thinking about spending money has had a few effects for me. First, it has allowed me to save more because I make fewer mindless or automatic purchases. Second, it has made me think critically about things that I own or would like to own. In 1880, William Morris, the British designer and member of the Arts and Crafts movement delivered a lecture in which he said, “If you want a golden rule that will fit everybody, this is it: Have nothing in your houses that you do not know to be useful, or believe to be beautiful.” I think this is the best encapsulation for thinking about how we spend money. We should focus on buying fewer, better things, and devote our dollars to those objects and experiences that are beautiful and useful.
How to Spend it
Good advice!