A lot of personal finance blogs focus on finding ways to save or invest money. If you are a regular reader of this blog, you know saving and frugality are topics I spend a lot of time writing about. And with good reason – maximizing your savings and investments is one of the most important things you can do for your future. That is because money saved now is worth more than money earned in the future. The time value of money, compound interest, taxation, and other factors play a key role in this fact. But there is more to life than just saving for a rainy day, or investing until your net worth is the size of a small country.
Money is only meant for one thing – spending.
Think about it for a minute – why do people focus so much on saving and investing? It’s so they can have more money later… to spend. Otherwise there would be no point in saving or investing. The key is to spend less than you earn, but still enjoy life in the present.
It’s OK to splurge
JD, from Get Rich Slowly, asked several personal finance bloggers and his readers what they splurge on. His article contained responses from about 15 personal finance bloggers, and elicited over 150 reader responses. The items people chose to spend a little extra on, even when it wasn’t necessary, shared a common bond: they make life a little brighter and more enjoyable now.
Spend money on the important things in life
Everyone had at least one item they often splurged on. The most common items I noticed were food, experiences (travel, concerts, eating out, etc.), quality of life issues (clothing, appearance, housing, etc.), and recreation.
People splurge on things that are important to them. My answer was experiences (more on that below). But others prefer to spend extra money to enjoy life every day with a nice meal or a quality glass of wine. Others prefer to spend more money to decorate their house or buy nice clothing. Sports, video games, and other recreational items bring others joy.
I like to spend money on experiences.
Last fall my wife and I took our honeymoon – a cruise on the Mediterranean Sea. We traveled to Spain, Italy, France, Corsica, and Gibraltar. We did as many excursions as we could, ate wonderful food, and had an exceptional time. The memories we made during our honeymoon will last our lifetime. We spent several thousand dollars and came back with nothing but memories, hundreds of photographs, and a few small gifts for family. And it was worth every cent.
My wife and I also like to travel or go to ball games, concerts, musicals, and plays. These are experiences you have to pay a lot of money for, and when it is all said and done, there is nothing tangible to show for it (unless you buy overpriced souvenirs).
So what? Having the opportunity to see a commemorative showing of The Phantom of the Opera in London was an awe-inspiring event. Rock concerts? I have been to dozens. I have spent hundreds of dollars on live concert events, but I have seen some amazing bands perform live and it was worth every cent.
Money is for spending. Money is for living.
It’s easy to get caught up in debt reduction or retirement planning and get stuck in the rut of “cut back, spend less, save more, repeat.” It’s easy to forget that life is more than just living for tomorrow. We need to remember to live for today, while we think and prepare for tomorrow.
Let me give you an example: One of my favorite personal finance blogs is Gather Little By Little, which chronicles the author’s journey out of debt. Glblguy shares his experiences, and though he has a ways to go before he is debt free, he and his wife have made great progress. One of the things I really enjoy about his blog is candor in sharing his financial decisions. You see, even though he has debt, he still knows it is important to spend money now.
The best example of this is a recent article in which Glblguy shared how he bought his wife an engagement ring on-line to replace her old one which they had to sell because of financial hardship. I know this was a difficult story to write, but it illustrates how dire their financial situation was, and how much it affected them emotionally. When they had an unexpected tax return, they decided the money was worth more to them to replace the ring than it was worth to repay debt. And I agree, 100%. This is a must read story to understand why spending money now is just as important as repaying debt or saving money for later.
There is more to life than repaying debt or saving for a rainy day. Money is for spending. Money is for living. After all, life is too short to drink cheap beer.