Valueless Purchases
Some things just shouldn’t be purchased if you’re seeking a happier (and wealthier) life. That’s my opinion at least. I see some consumer products as ‘valueless’ purchases even if they are quite expensive. This means that they don’t really add value to one’s life.
Read on and you’ll see how I try to win an unwinnable argument with my wife.
But first, let’s think about how our hard-earned income should be spent.
Spending
There are plenty of rules out there for how we should allocate our spending. The 50-30-20 rule is just one of these. It advocates that of our monthly income, 50% is spent on needs, 30% is spent on wants and 20% is saved or invested. I don’t mind this rule. But I feel that I could easily cut back the 50% to 40% and increase the 20% to 30% at the very least.
Other well-intentioned advice consists of having a certain amount of ‘fun’ money to enjoy after a set percentage has been saved or invested. Ramit Sethi’s book, ‘I Can Teach You To Be Rich’ suggests that cutting back in certain areas can make way for such splurging. If you love expensive restaurants then go for it. Just as long as you’re not wasting money in other areas.
In my household, we invest first, pay expenses second and spend what’s left. I leave the spending part to my wife.
Frugality
For me personally, I’m going through a rather frugal phase where I really only spend money on food and travel. I haven’t spent on a major expense for years and we have no car payments to worry about either. I feel that pretty much all of my spending is controlled and every expense adds to my quality of life in some small way.
My view is that money invested represents me making decisions to benefit my wife and me in the future. I measure it as ‘my spending’ and am happy that this quite large chunk taken from my salary is going somewhere to grow. This is the non-negotiable and highest ‘value added’ spending.
Presently this is pre-tax contributions to an employer-established investment fund (5% employer and 15% from me) and loan payments for an investment property. The rest I leave to my wife to manage. And for the most part, I’m happy with this arrangement.
However, there are times when I wonder what the rationale for some of our purchases is. This forces me to think deeply about the role of spending and how it contributes to happiness.
Friendly Reminders
On our refrigerator, I have a money-spending reminder written on a Post-it note.
It simply says: ‘Can we afford it? Do I need it? Will it add value to my life?’ I find that I am often able to reject certain spending thoughts that I have based simply on the ‘Will it add value to my life?’ question.
This is great for two reasons. 1. It helps me to save and 2. I hate shopping.
There is no satisfaction from shopping. I guess I don’t always get satisfaction from spending money.
My wife does.
For a while I used to enjoy buying running shoes. I could see their value as I was training for marathons and paid a lot for good quality. I used to buy other ‘boys toys’ like paddle boards, guitars, sports equipment, and nice trendy clothes.
My wife spends on beauty products and fashion accessories. She is frugal some of the time. But she can also be extravagant.
I guess the point of this post is that I truly believe that some consumer spending is completely pointless and hence it can actually take away value from people’s lives. For some people, this can also lead to high levels of debt for things that are not necessities.
As I’ve heard several different people state (including being referenced in the movie ‘Fight Club’) ‘We buy things that we don’t need with money that we don’t have to impress people that we don’t like’.
Valuing Our Purchases
If only we had a ranking system in place for deciding on what spending is worthwhile and what isn’t.
Maybe I can set up one.
Let’s consider a list consisting of books, shoes, clothes, travel, dinner out, coffee, perfume, handbags, and baseball caps. (I’m going through a baseball cap phase right now)
We could rank them according to the satisfaction gained or as I prefer the ‘value added’ to our life, and discard the lowest-scoring items. The problem is of course that my wife and I would have drastically different rankings.
Our Rankings
These would be mine on a scale of 1-10 with 10 adding the most value.
Books – 9 Shoes – 6 Clothes – 5 Travel – 8 Dinner out – 6 Coffee/Tea – 8 Perfume – 1 Handbags – 0 Caps – 7
Here would be my wife’s:
Books – 2 Shoes – 8 Clothes – 8 Travel – 8 Dinner out – 7 Coffee/Tea – 7 Perfume – 8 Handbags – 9 Caps – 4
We all have different tastes and see value in different things. But can’t some of this discussion be objective too?
What are the biggest wastes of money? Can we come to some consensus here?
I recently suggested on Twitter that handbags were to me the greatest waste of money of any consumer good that I could think of. There was a lot of support from (mostly male) respondents.
I just cannot see any value in fashion accessories at all. A bag is for carrying stuff in right?
With this current mindset that I have about spending, I feel that I could live a very frugal life and that I would make huge savings and investment progress. I’m able to find satisfaction in simple things that cost little or that are free. I could sacrifice travel in order to invest. I don’t need designer clothes and I’ve quit marathon running hence the expensive shoes are no longer a necessity.
Quality Of Life
This lack of desire to spend money on ‘stuff’ places me in a great position. I can save more, invest more and grow my wealth.
But am I losing out on the present enjoyment of life in order to retire well? Should I spend more now while I’m still young? Should I splurge sometimes? Will I feel better if I dress better?
Is spending on experiences always superior to spending on ‘stuff’?
And the bigger question: Can I understand my wife’s desire to have an expensive Gucci handbag?
As partners in anything you have to try to see the other person’s point of view. So perhaps I could equate a Gucci handbag with FIFA World Cup tickets. My wife would no doubt see that kind of extravagant spending in a similar way to the way that I see spending on handbags.
So what are your extravagant expenses and are they worth it? Do they really make your life better?
Summing It Up
And this is the big point here that I’m maybe coming around to. If they do truly make your life better, if they are affordable and you’re not going into debt for them, then maybe some things that might meet my particular criteria as being ‘valueless’ purchases are for some people, worth it after all. And maybe this realisation might just save a marriage or two.
At the very least we should consider each purchase that we make in some way. Put it to the test. Does it add value to your life? If it doesn’t, then why would we give up other experiences or benefits that come from spending that money? You work hard for your money. Make sure that you are getting true value for your effort.
Happy spending !
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