I was standing in my kitchen after I'd just finished a workout, about to add protein to the Daily Harvest smoothie I'd just pulled from the freezer when she asked the question that consistently makes me cringe:
“Aren't those expensive?!”
A friend of mine who was in town visiting had just come downstairs from our guest room and was eyeing the smoothie package. It was clear from her tone that she wasn't asking out of curiosity. She wasn't asking because she was interested in potentially looking into buying them herself or because she wanted to know my rationale behind buying them. Her question was basically a statement and by asking it she was telling me that she both thinks they are expensive and thinks it's ridiculous that I would spend money on them. Period. To her it's a waste.
But here's the thing: Saying something is expensive says more about your priorities than it says about the actual cost of what you're talking about
And that's exactly why I'm sharing this story.
In order to be truly financially optimized, you can't just be good at saving and investing. You have to be good at spending too! Most people either miss this completely or they mess this part up.
Being good at spending means maximizing the value you get from every dollar you spend. Not because you're investing it or getting some other kind of financial rate of return, but because you're maximizing your personal happiness with those spending decisions.
So, if you want to build the muscle it requires to consistently become a better spender, here are the steps:
- Think about the last thing you spent money on that you thought was expensive or that someone else commented was expensive
- Think about all of the reasons you made that purchase. What were the benefits? What was the thought process?
- What does the prior rationale tell you about your values?
- What were you or the other person actually comparing it to, and was that the right thing to compare it to?
Rinse and repeat. You can even do this for your highest spending categories and work down the list
This might seem silly, but I'll walk you through an example with the Daily Harvest smoothies from the story I shared.
- Daily Harvest Smoothies
- Before I got pregnant I looked up all of these pre-made freezer smoothie recipes online. I was planning to pre-make a bunch and freeze them. I never pre-made the smoothie mixes and realized that if I didn't order the pre-made ones I wouldn't be having smoothies. For one, it takes time to prep all of that fruit and other ingredients. I also didn't want all one flavor or to have my entire freezer full of a year's supply of smoothies. So the decision became, order pre-made or don't have them at all. When I calculated the cost it was somewhere between $7 and $8 for a smoothie. I figured that even if it cost the same amount for me to go to a smoothie shop and buy one, I'd had to spend time driving there, tip, I wouldn't be able to add my protein powder, and I wouldn't know exactly what was in it. In that light, I thought that was well worth it to be able to pick whatever flavors I wanted, know exactly what's in them, and have them sitting in the freezer for the 4-5 times a month I might feel like blending up a protein smoothie. My normal breakfast is a $2-3 protein shake so this IS more expensive compared to that, but it's a treat not my new daily norm.
- I value convenience, time saved, variety, good and unique ingredients, and things that make it easier to meet my health and fitness goals
- The friend making the comment was likely comparing the cost of the pre-made smoothies to making them yourself and also to the cost and benefit of going out to a smoothie bar. She would think either option is less expensive and more worth it. She is someone who (if she really wanted smoothies in her freezer) would happily spend a whole Saturday going to the grocery store, buying the ingredients for 2 different smoothie recipes, and then prepping, portioning, and freezing them. She is also someone who values the experience of going places and doing things, and would actually rationalize that going out and getting a $10 smoothie from a smoothie bar is less expensive or a better deal than the smoothies I ordered because you still have to add milk and blend it up yourself. So whether the decision is pre-make or pay to have it done for you, she wouldn't see the value in my decision.
See why this exercise is important? As I go through it, it either reinforces my decision and my values or it gives me an opportunity to re-evaluate whether I want to keep spending on the item going forward if it's out of alignment. It also takes the charge away from her opinion because I can see where she is probably coming from and why would I do anything different based only on her opinion if she has different values, wants and priorities than me? I wouldn't.
Going through this exercise and learning that something that you spent money on actually isn't in alignment with your current values or isn't something you want to continue spending on is actually a great thing. It doesn't mean you aren't a good spender, it means your spending, goals, and priorities are evolving and it gives you an opportunity to continue spending better as life changes.
It's valuable to do this with everything you spend money on, but when you're just getting started it's more practical to focus on paying attention to spending that makes you pause like on “expensive” things OR on one of your highest budget category (for us this might be groceries). Once you understand what you value and gives you maximum happiness around your spending, it becomes easier and quicker to be deliberate about optimizing all of the areas of your budget.
The last step of the exercise which is to try to analyze where the person who commented on your spending is coming from is important is that doing this helps make you less judgmental about other people's spending and keeps you out of their financial decision making. The truth is, just like you think through the pros and cons of different decisions and have rationale behind your spending, so does everyone else. You aren't privy to all the inner workings of anyone else's finances or their values and goals EVEN if you think you are. So by realizing that when others make comments about your spending, half the time they don't really know what they're talking about or your motivations, you start to understand that the same is true about you in relation to the spending of others. In short, you're making it easier for them to be better spenders and get enjoyment from their money by not causing those around you to question the merits of their spending decisions and potentially behave differently as a result.
If you want to be financially optimized one of the best things you can do is learn how to spend well, and the easiest way to become a better spender is to tune into your values and strive to continually spend in alignment with them. Not based on your perception or anyone else's about the merits of what you're spending on. After all, isn't the point of money to get what YOU want in life?