My friends say I’m good with money. I should say up front that I’ve definitely been blessed with parents who in their later years have been able to provide some financial support. Perhaps more importantly, they’ve been a safety net I knew I could rely on if things ever went really bad. My folks would secretly be overjoyed if I had to come live with them for a few months, and they have enough cash flowing into and out of their lives that they could also help me get back on my feet if needed.
But it wasn’t always this way. I remember getting to count coins from my mom’s tip jar when she was waitressing nights at Pizza Hut to help make ends meet. If we had enough change, we could buy a small bag of my favorite Seyfert’s potato chips to supplement our lunch we had packed for going to the local lake. Since we often didn’t have enough change, we often didn’t get the chips. While many many kids were worse off than I was growing up, my early years were still a lesson in delaying gratification and learning to make do with what you have.
Somewhere in this mix of adult class privilege and childhood delayed gratification, I learned a set of rules about money that help me manage my day-to-day finances. After describing some of my rules to a friend, I thought I’d try to explain them here as well.
9 Weird Money Rules
1. If I want to know how much money I have, I look at the balance in my savings account (not my checking account).
2. If I don’t have any savings, I’m broke and should be making decisions as if I’m broke. If I’m carrying a credit card balance, I’m panicked. This leads me to making life sacrifices from what I want to what I absolutely need to survive much earlier than most of my friends.
3. I make life sacrifices in recurring bills, so it’s less about willpower in the moment, and more about adjusting my lifestyle to my current income. I suck it up and move in with roommates. I drop cable & internet. I reduce my phone plan. I drop memberships & subscriptions.
4. I have 7 things in my apartment that I spent more than $100 for. My futon bed. My computer. My iPod. My piano. My desk chair. My bike. My first pair of red Danskos that I bought 6 years ago and have worn ragged.
5. I agonized over each of those purchases. Is there a coupon? Can I wait for it to go on sale? Can I get something of comparable value at the thrift store? Is this an investment that will last several years? Even after all the self-assurances, it was still hard to make the purchase. But I don’t regret any of them.
6. I more routinely spend more than $100 on what I love, which is experiences and personal growth. Travel, classes, retreats, counseling have all come in at more than $100 a pop. But I still find ways to be frugal – I find the cheap plane ticket even if it means the time is inconvenient, I stay with friends rather than rent a hotel room, I take public transit rather than renting a car. I pay out of pocket for the best counselor rather than switching to a cheaper but less effective therapist because I know the best counselor will help me more in one session than the less effective one will in three sessions.
7. I do my damnedest to only buy things I really love. But the minute I feel “I can’t imagine life without this!” or “I really need this” – I make myself step back and wait a few days before purchasing. If I’m still feeling the same way in a few days, it’s probably worth buying.
8. When I’m more broke than flush with cash, I often ask myself “What’s the underlying need (or needs) I’m trying to meet? Can I meet those needs in other ways that are cheaper but still satisfying?” Like, if I need to feel connected to far away friends, is it cheaper to talk on the phone rather than buy a plane ticket? Can I convince them to come visit me?
9. I calculate nearly every purchase in terms of my top love. I’ve been wanting to move into a bigger apartment for the past 2 years. My studio is convenient and big enough for me, but useless for entertaining others. But in this town, I’d have to increase my monthly rent+utilities at least $150-$200/month to get into the kind of place I envision. That’s a plane ticket every other month! When I bemoan my small apartment, I remind myself begrudgingly that I’m just choosing travel over easy entertaining. I ask myself, “Have I changed my mind?” And the answer is always NO.
I’m curious what you think – which of these rules makes me most weird about money?