The other day I went to a vintage clothing shop with a friend. I needed some simple summer staples: tank tops, skirts, shorts. I don't like shopping for clothes, so I always try to go with friends who enjoy it and are better at finding great stuff than I am.
This is as high-priced as clothes shopping ever gets for me. I get most of my wardrobe from clothing swaps and the Salvation Army, but once in awhile I find myself in need of something specific and go shopping. I found a few nice tank tops that were reasonably priced, and a few pairs of pants for my husband. Mission accomplished.
I also found a ridiculous dress. It's a bright blue flapper-style minidress. My friend tried it on, and when it didn't fit her she urged me to give it a whirl. It fit perfectly. I've wanted a flapper dress since high school, and never had one.
But I wavered. After all, I don't need a silly dress. It wasn't on my shopping list when we walked into the store.
Then my friend looked at the price tag and said, “Look, it's $8.25 cents worth of fun.” I was sold.
A small splurge
If I thought about it not as Stuff I didn't need but as the fun of wearing this dress to a party sometime this summer, it seemed like a totally worthwhile purchase. I brought the dress home, showed it off to a few friends, and can't wait to wear it.
Obviously this is the kind of splurge I can't make all the time. If I did, my closet would be full of silly dresses I almost never wear. Stuff takes up space, and too much of it becomes clutter. This is one of the reasons I prefer to spend money on experiences. If I'm going to spend money on a good time, I like paying for my fun directly, rather than buying Stuff I think I'll have fun with. In this case, I made an exception to my rule.
I won't lie: I felt a little guilty afterwards. I'm the Not-Buying-Stuff Lady. What was I doing splurging on a dress I'll wear once?
I thought of my new dress when I read Ramit Sethi's recent post about the psychology of cutting back on small expenses like lattes. Essentially, he counsels against worrying overmuch about them. He writes:
Constantly over-analyzing tiny purchases is exhausting and ineffectual. This is one of the great joys of earning more money: I don't have to worry about paying for cabs or picking up my friend's drink. As a cognitive miser, this is a great relief. I can instead focus on the things I really care about.
Instead, Sethi wants to see you sweating the big stuff: finding ways to earn more money, automating your finances, and investing. He says the frugal focus on paring back your $10 splurges is really a distraction. You're expending a lot of effort for relatively small gains. All the lattes you can drink won't add up to more than learning how to negotiate your salary.
He's right of course. I'm a huge fan of focusing on big things. But there are limits to his line of thinking.
Frugality is an important part of personal finance
Opportunities for the kind of big wins Sethi is focused on come up rarely. True, you can make them happen by seeking them out to a certain extent. You're probably better off putting energy into starting a side business than you are clipping grocery coupons, for example. But anytime you get a chance to make a big impact on your finances, it's a special occasion.
Small spending decisions, on the other hand, get made every day. You're constantly confronted with decisions about whether or not to drop $4 on a latte or $10 on a vintage party dress. Any one of those purchases may be trivial, but the habits those purchases feed can get expensive.
One of the things I've learned in my frugal adventures is that I can't always see the big wins coming. I cut my heating bills nearly in half last winter by hanging insulating curtains in the doorways to keep heat in my living spaces and out of our central hallway. That was just another one of the quirky little things I try to save money. I expected it to be about as lucrative as reusing plastic baggies or diluting my shampoo. In other words, the kind of thing that makes me feel good about how I'm consuming resources, but doesn't save a noteworthy amount of cash. Instead, it saved me hundreds of dollars and made the house more comfortable to be in. This was definitely a big win, but it seemed like a quirky frugal move when I started it.
Another reason to practice thrift is to maintain a simpler, more frugal mindset. If I usually say no to impulse purchases, I'm more likely to say no to any given one. That leads to more money saved and less Stuff cluttering up my house, overall. If I typically shop around for the best value on something, I become more skilled at bargain hunting and cumulatively that habit pays off.
Even if the amounts saved are small, they're significant over time. If you can permanently shift a spending pattern to save yourself $500 a year, it's as if you've just given yourself a $500 raise. That won't make or break your finances, but it's money worth having.
Don't become obsessed
What it's not worth is obsessing over. If you have good financial habits, there's probably room in your budget for the occasional splurge. No need to feel guilty about making them. The key is just to be aware that you're deviating from your pattern, and to stay within your real budget. That is, the money for your fun has to come from somewhere. You may want to give yourself a little “mad money” each week to play with. If you don't spend it, great. You can just hold onto it for a bigger splurge down the line. If you do find yourself trying on the perfect party dress in your neighborhood thrift store, you can indulge guilt-free.
I don't have that kind of play money, but I'm thinking maybe I should, even if its a small amount. My spending plan is fairly detailed. My husband and I have talked about instituting an adult allowance for each of us, but the plan has never really taken off. As a result, whenever I spend money on some small luxury, I feel a little guilty. It may be that I can afford the $10, but I didn't have the money earmarked for fun so spending it feels like cheating.
I don't think I need to make more room in my life for spending. If anything, I'm looking to scale back on my expenses and save more. But I do wonder if I don't need to adjust my spending plan to give myself some wiggle room. $10 isn't worth feeling guilty over.
How do you make room in your life for small splurges? Do you tend to feel guilty over minor indulgences, or keep your focus on bigger things?
Author: Sierra Black
Sierra Black has spent most of her life broke, no matter how much or how little she earned. She started turning that around two years ago with some radical life changes like moving, shifting careers and committing to buying nothing new.
Sierra and her family live in the Boston area. Sustaining a family of five on one salary has led to some creative frugal maneuvers over the years, especially living in an expensive urban area. She’s learned how to make a $1 family meal, cut her heating bills in half and save thousands of dollars on travel, clothing and fun.
When Sierra isn’t working magic on her family’s finances, she writes about personal finance, sustainable living and parenting.
You’ve got to have fun once in a while, and an $8 splurge is way better than a $1000 splurge.
Sometimes, when people go without spending on “fun” for a while, they reward themselves with a ridiculous purchase like a big screen TV or a new car. In your case, I think $8 was just fine. :)
My weekly personal spending budget is set to a level where I generally spend all but $1-2 of it. I save all of the leftover money and daily change, and use that money for splurges. It’s fun to roll up the coins and stack the bills to see how much I’ve gathered, and the occasional times I spend it provide me just enough of a treat to stay on budget the rest of the time!
My husband and I rolled coins last night — $92 worth of it!
If you’re actually going to wear the dress, then it’s just a regular purchase. If you’re never going to wear it, unless you’re using it as decoration (on a wall or something), then it isn’t worth purchasing just to stick it in your closet, no matter what the price. If you’re planning on wearing it just once, is it worth $8.25 per wear? Probably if it’s Halloween or a special occasion. Otherwise, that depends on the rest of your financial situation and what you do with the dress after. $8.25 can be a lot for fun if the fun part doesn’t last very long and turns into clutter right away.
“Look, it’s $8.25 cents worth of fun.” This statement really made me cringe. I’ve had experiences where shopping with friends strongly influenced me to make purchases I’d never make. Once, the offhand comment that something looked good was a strong enough influence for my (very broke) friend to pull out her credit card!
I would describe my shopping as “man-like”: What do I need? Grab it off the shelf, check out, done. I’m not a shopper! However, I was out recently with a good friend who is quite the shopper. I (mentally) had $20 to spend on a new shirt. I found one really nice one at a high discount, and another that still kept me under budget. When I checked out, there was a 15% discount on the higher priced shirt — nice! I’ve saved money! Her way of seeing it? “15% off? Now you can get another shirt!”
To address a more specific point of your article: my husband and I do adult allowance. When we made the budget, things were awesome. I was happy to have a known amount that I could spend on whatever I wanted, no questions asked, not judgement made. I did run into a problem, though. My friends were appalled that I would get an “allowance,” they thought it was my new husband trying to control me and treat me like a little girl. Maybe they didn’t realize that my allowance was $20 more a month than his, and he got one too? Either way, I had to change “I got my allowance!” to “I got paid!” so no one would get weird and judgmental.
Peer pressure is a funny thing. This is why I always shop alone. I like your comment about shopping like a man as I shop the same way. I hate shopping, especially for clothing. (Shoes on the other hand…let’s not go there.) I usually spend about 5 minutes glancing over the clothing racks and if something doesn’t jump out at me, I move on. The last time I bought new clothes, I ended up returning both items because I didn’t like them enough to justify the $20 I spent. There might have been a bit of guilt in there too…
My husband used to have crazy purchases on his credit card every month. And they were usually things he couldn’t even remember by the time the bill came.
I decided we would each get our own “pocket money” when I deposited the pay checks every two weeks. NO MORE CRAZY PURCHASES! Now that he has his pocket money he pays more attention to where it goes and for what.
It’s a beuatiful thing!
“Man Shopping!” Yeah, you’ve got us figured out pretty well…me at least! I HATE shopping and avoid it at all costs!
According to my friends (and hubby) – shopping like a man is getting your wife to do it. LOL!
This is a wonderful article about balancing frugality and spending. I shop, err… save, much like the author! Coupon clipping and all.
Cheap and frugal are two completely different things. Last weekend I purchased gifts for both my moms– $35 wrist wallets from Coach. They were normally $78 each. The point is not paying full retail price by seeking out a deal.
I don’t think being frugal necessarily means not paying full retail price. That’s one of those easy traps to fall into. If you need to make the purchase, sure, look to see if you can get it for cheaper. But my mom frequently buys clothes because she saved 75%+ (she’s a deep discount shopper). Even if you’re saving a large amount, you’re still spending something.
Many people define coach, even at full price, as frugal because the quality is high enough to negate repeated purchasing. In my mind, the difference between frugal and cheap is that cheap people only look at price and frugal people look critically at price, quality, need, and opportunity.
“…cheap people only look at price and frugal people look critically at price, quality, need, and opportunity.”
Great distinction, Leah! I’m going to remember this.
Reminds me of one of those Hoarders TV shows. The house was stacked high with stuff that the lady had bought ON SALE.
thankfully, my mom is also really good at giving clothes away. a lot of times, she’ll buy good quality clothes at deep discount (think $5 for a heavy wool sweater that was $125 retail) and then give them away to folks in need. she donates a lot of seasonal stuff to homeless shelters and the like. And she can afford to do that, so I don’t harangue her about her habits. But it still galls me when she talks about how much she saved by buying what she buys.
My wife and I have an adult allowance. We started it for mostly the same reason you described here. We had money, but always felt guilty spending it. Now we get $1/day that is earmarked for nothing. We save it up and have mutual permission to spend it on anything, anywhere, no questions asked.
My most frequent indulgences are value-menu sundaes from Burger King up the road from where I work. My wife just used a bunch of her saved up play money to buy a microscope.
I realize it may not be for everyone, but having an allowance has been great for us.
An allowance is a really good idea for someone who is susceptible to statements like, “Look, it’s $8.25 cents worth of fun.” $8.25 has to be put into context. Starbucks gives you fun at less than half the price, but daily justification of that becomes the stereotypical latte factor. What are you giving up for each $8.25 or $3.75? Maybe it’s worth it, maybe it’s not. You don’t know without the entire financial situation. If you have high interest debt, neither is worth it.
If you have a reasonable allowance then that context is managed for you. You have $20/week to spend or however much, guilt-free on whatever you want and you can’t go over. Your “mistakes” are limited by your weekly allowance and are reasonably priced learning experiences. Just justifying purchases because they’re fun can lead to being perpetually short on money to pay the bills. Where is that fun money coming from? http://nicoleandmaggie.wordpress.com/2011/06/13/a-step-forward/
Nicole- self rightous much? Why on earth are you even reading this site if you have the entire world of $ figured out?
Excuse me? What a mean thing to say. http://nicoleandmaggie.wordpress.com/2011/06/09/crabs-in-a-bucket/
You know, you’re right. I don’t have to visit this site. I never actually did. Neither does Tyler K. I was not aware one had to have no knowledge to read or comment on websites. I did think one had to be polite to comment on this one though.
Really? People are “liking” Crystal’s comment that my agreement with the previous commenter that an allowance can help moderate your fun spending so you don’t go too far is self-righteous? Of all my comments you’re picking that one?
It seems like bullying to me. I generally think of this as a nice community that I have enjoyed being part of. I’m disappointed.
But no, I’m not in dire financial straits. I do have a lot of this figured out. I didn’t realize that was a problem. If only folks with money problems are allowed to comment, then I do think that eliminates a good portion of the GRS community.
I am with Nicole. It isn’t self righteous, it’s an opinion.
$8.25 is a joke. It isn’t worth thinking about much less posting about. If you have to resort to an allowance of $10, then you have bigger problems than “fun” spending.
I’m guessing you misunderstood Nicole’s tone – I think she was saying, “that’s a good idea, and people who struggle with impulse buys should try an allowance.”
It looks like you *thought* she was saying that Mr. Mordecai is “someone who is susceptible to statements like, “Look, it’s $8.25 cents worth of fun.””
I don’t think that’s how it was intended, and your response was definitely out of line. Just my $.02.
We do the allowance thing too. We call it our “fun money” and each get $120 deposited into our specific ING fun money account monthly. $120 is about 2.5% of our combined take home pay of $5000 a month – we also put another 5% a month into a vacation account. That is 10% for pure fun. We save between 35%-40% and live on the other 50%. It works for us.
When we splurge, the money gets taken out of our fun money account and put into the checking account to pay the bill. My husband uses his for a Massage Envy membership, a Curling league, and gaming. I use mine to cover little splurges like the $9 dress mentioned above…so my account still has a lot left. I was thinking of getting some friends together for a weekend away…
Anyway, woot for the monthly allowance! Before that idea, I felt guilty splurging on anything at all.
We each get $15 a week. If I can I find myself trying to save it or give it back to the family budget. DH doesn’t have this mindset. If he doesn’t spend his he saves it. It kind of irks me but then I have to remember that this is no questions asked money and it’s his. If I want to keep mine instead of give it back I should.
I think the allowance or fun money or whatever you want to call it is a really good idea, even if you have credit card debt.
We put a huge percentage of our monthly income toward eliminating debt, but it’s a slow road. If you never have any money to splurge on (like 8.25 on a dress), I think it’s a good way to go off the rails altogether.
Dave Ramsey talks about the gazelle-like intensity, and although I get that it can work really well for focusing to pay things off, I think that’s hard to sustain for more than a year or two.
My husband and I each get 50$ twice a month in our fun accounts. I think he uses his for soda or buying lunch at work. Or if we want to eat out, we may combine our funds. The point is, it’s his and he can do what he wants with it.
I have a tendency to spend mine on little wants for my household. I may not desperately need new pot holders, but if I happen across some beautiful ones on sale, well, I can buy with that. Lots of times I contribute it back to the family account. This is my choice, and I’m glad to have it.
Sierra, I really think you should consider doing the allowance or fun money or whatever. It’s awesome to pay off debt and balance household finances, but a little budgeted fun shouldn’t make you feel like you’re off the rails.
Couldn’t you just take it back to the consignment shop after you wear it, and get half your money back when it sells?
Probably the shop owner thinks she’s in the business of selling clothing, not renting it.
That’s what I was thinking too! Or at least donating it with other items, to take off on taxes.
Other replier — do you really think that consignment shops do some sort of questionnaire about where you got it? If the owner can make money off the same item twice would they turn it down?!
Our old school’s bazaar had some toys that I swear showed up every single year — we resold them every time!
I have a similar attitude about small splurges. We’ve never really had an entertainment budget because we don’t spend much money on concerts, tickets, movies, etc. But we are paying for entertainment and fun in other ways.
My SO and I might take a long walk and split an ice cream cone. I don’t need the ice cream, but I keep a healthy weight and $4 for an evening’s entertainment is not a bad deal, it’s fun, even if it’s not a great deal for an ice cream cone.
I, however, try to stay away from buying material things as fun since they stick around long after the fun is gone.
You need some joy in your life and although I’d be the first to say that many of the things that bring me joy are free, it is nice to have some variety and, let’s face it, most forms of entertainment cost money. I think the key point is keeping it within your overall budget and not making it a habit.
Did I bookmark this page wrong and somehow end up at The Simple Dollar?
Sorry about that. I thought I was at GRS, where they discuss the philosophy behind money and spending, charitable giving, moving beyond frugality to achieve your financial goals, and other interesting topics. But I see we are talking about 8 dollars here, so I’ll just move on….
Seriously, people need to get a grip. If your budget is so tight that you have to carefully watch every incidental $8.25 purchase, that’s one thing. But there’s no indication that that’s the case here or for most of the commentors. (Conversely, if you want to obsess over every $8.25 purchase, that’s fine, but there’s no reason to foist those neuroses off on people who don’t have them.)
No, if you were at The Simple Dollar, the article would be 500-1000 words simply concentrated on the dress. Whereas I find this to be a reasoned, thoughtful article on little splurges and whether or not they are worthwhile to worry over. I especially love the part where Sierra explains that sometimes those little worries save much more than you thought (insulated curtains to keep from heating hallways? total pro-tip that I never would have thought of).
The Simple Dollar has a good mission for what it does — to help those who are deeply in debt struggle out. I’m not getting that vibe from this article. Sierra’s point was that the $8 won’t kill her budget, and she is perhaps being overly worrisome.
And this is the point where I realize you may just have been poking a little fun ;-) In which I say, haha, good point. This is more similar to a Simple Dollar article than what we typically see here.
I thought the article was good, but I wish the example was a bit more realistic (ie a higher price point).
$8.25 is (literally) pocket change for most people.
8.25 is a half’s week of groceries. my budget is tight to the point where i have about $20 a week to spare, most of it goes to groceries, i have literally a couple dollars left. yes a $8.25 dress could blow my budget. i guess i’m the target audience here. ;P
How many $8 purchases does it take to equal significant money? Not many for me. I think one of the ideas in the article is knowing the difference between an occasional fun splurge and a habit that nickels and dimes you into a costly expenditure over time.
Exactly! I was just having my own angst over how small splurges add up. It’s not that I can’t drop $10 on a clothing item, but I find it can easily turn into more… and I have bills that should be paid instead… and it’s my own crazy mental dialogue about frugality. I love the variety of articles on GRS. This one tapped into my own thoughts today.
Word.
I thought the whole point of this article was that $8.25 isn’t significant. Don’t let worry about whether you’re mismanaging eight bucks stop you from doing the right thing with the other 9x% percent of your income.
That’s what I got out of it, at least.
I can see where Ramit is coming from, and it applies, I suppose, if you have a regular job in a decent economy.
Some of us, though, do not have jobs whose salaries are negotiable. This is especially true during a depression, which, like or not, is exactly what we’re in today. Other people are in occupations with limited numbers of job openings, and so moving upward is difficult or impossible, and moving laterally gets you nowhere except maybe to someplace with a better climate.
And more and more of us are now living on fixed incomes. My income, for example, will never go up, unless I choose to pull down more of my savings — which will mean that if I make it to advanced old age, I’ll have less to live on then, when I’ll actually need more to cover medical costs.
Thus my sense is that while Ramit’s no penny-pinching wisdom applies for many earners, for others its specious.
I think the interesting thing re: job salary negotiation is that I have never had the opportunity to negotiate my salary. I’ve tried several times when offered jobs. But it seems that the field I work in is so limited, especially when you’re first entering the field. I’ve worked for the government, for colleges, and for public schools (not as a teacher yet). At all three, you pretty much end up with a step and lane, and they tell you where you end up. So I laugh/cry a little inside whenever someone says that a great way to increase your income is to negotiate a raise. And then I go pick up more hours doing little side things instead.
They’re more or less the same thing, especially to Ramit–his point is that spending your energy on increasing your income is vastly better than decreasing your expenses. The way you do it is almost incidental.
to clarify, then:
would Ramit say that it’s better to pick up a side job when you want to buy a laptop rather than decreasing your spending for the amount of time needed to save money for said laptop? Because that’s what I typically do. If I want an expensive splurge, I go earn the money. I finished teaching my college semester and then immediately subbed for three weeks to make the money for my new computer.
My wife and I each get $250/mth in adult allowance to spend as we please. That may seem like a lot, but it covers everything discretionary (clothes, restaurants, movies, individual travel, charitable donations, flat screen TV’s you save for months to buy, etc…). Works for us.
“You’re expending a lot of effort for relatively small gains.”
I think this is the heart of the matter, here. People spend a lot of time worrying about the small things without making bigger efforts to change.
Good article, and I hope you like the skirt! I’ve wanted a skirt like that for years, so I’m living vicariously through you. :)
I think having some kind of “adult allowance” is essential. You need to constantly let off a little steam. This really helps you from feeling deprived, or having to worry about small purchases like this at all. We call this “blow” (there is no mistaking what it is for… for blowing!) in our budget. I get a certain amount each month, and so does my wife, separately.
We find it incredibly freeing.
Sethi is spot on. If I have to spend all day hunting down and clipping coupons to save $1.75 on a cup of coffee, I’d rather “splurge” and get the drink and get it over with. Don’t get me wrong. I consider myself a frugal person, I’m just not the kind of person fretting over whether I saved a toilet paper tube or plastic bag to use in some DIY project. The minute savings don’t justify the huge mental cost (and not to mention effort) that this line of thinking requires.
For some reason, this article made me think about the concept of financial freedom. And while most of the time it’s defined in terms of not having to work, this article made me think that part of my definition of financial freedom is not having to think about the little things. I can spend $8.25 on a dress without guilt, worry, or over-analyzing it. To me, that’s an important component of financial freedom.
Thanks Sierra for such a well written, thought provoking article without just rehashing the “stuff vs. experiences” or “big things vs. little things” over again.
Definitely. I grew up without a lot of money. When I got my first job after college, it was a revelation – like a huge weight off my shoulders – that I didn’t have to panic when I ran out of deodorant or even needed new shoes.
I don’t consider myself financially independent, but I still really value that freedom.
After reading the comments, I just wanted to throw my 2 cents in about the article itself. Yes, I personally do not feel much guilt over $8.75 now, but I do understand the feeling from when we didn’t have as much money and no fun money budget at all.
When I start working from home as a full time blogger, I will probably go back to feeling a little guilty when splurging since my income won’t be as guaranteed and I’d feel like I was hitting our finances while taking a huge risk.
My point is that judging Sierra on her “guilt price point” is a bad idea. We all may have a price point too based on our own situations.
And this article was WAY different than anything at The Simple Dollar…it’s not like Sierra is trying to make you feel guilty for spending $8.75. ;-)
I don’t have a problem with spending on the small things, just the big things! I’ve been hemming and hawing about replacing our old fraying towels, but we spent 5K on remodeling our bathroom. I can’t get around to replacing our already old when given picnic table, but spent $960 repaving our brick patio.
If you are going to wear the dress, it’s not a frivolous purchase. If you are not going to wear the dress, it is a waste of money.
Oh please.
If you have your bills in order, a good sized savings account and all that – a < $10 splurge is not going to kill you. In fact, if you are not in the habit of buying things, that ONE dress will probably bring you more joy than you realize. Every time she puts that dress on she will remember that exact situation where she purchased it, out having a nice time with her girlfriend. It won't be one of 100 dresses in her closet, it will be her special party dress and I guarantee that she will have a huge smile on her face the entire evening.
Since she is very contentious with her money the vast majority of the time, there is no reason to be a puritanical miser and deny all fun. Besides, it's like with a diet… if you constantly deny yourself the things you want, you will soon find yourself binging.
Sierra, you wear that dress and you enjoy it. Every woman deserves to have a party dress that makes her feel beautiful.
Too many people focus on the so called “low hanging fruit” of their expenses. To be financially secure and keep to a real budget, you need go higher and attack that long term debt…i.e. mortgages, credit cards, car payments, student loans etc.
Some of us have the big stuff covered, are either out of large debt or on a prepayment schedule we’re happy with. We are in the process of rethinking the small stuff – what’s necessary for happiness, what’s just going with the consumer flow.
Probably more of that here than in a group of the general public.
I think the dress is a great fun purchase. I’m sure you will find special occasions to wear it, maybe to a Hallowe’en or Oscars party. It might be fun to wear it to a New Year’s bash. Wear it to a classic auto show and have your photo taken. That would make a fun gift or keepsake.
“Mad money” was one of the most important things about making our budget workable for me and my husband. Up to that point, I had been calling the shots financially, and since things were really tight, my husband would ask, “Do we have enough for x?” and my default answer was, “No, of course not.” That was very frustrating for him. After I read Dave Ramsey and tried to sell my husband on it, it was very important to have a “mad money” line item in the budget so that he could feel good about adopting the budget and sticking to it, and also to feel like he got rewarded for making more money, since it meant more going into his “mad money”.
I go both ways on the big vs small discussion. On the one hand, $10 is only $10. You’ll never miss it in the long run. OTOH, if I spent $10 every day, over the year, that’s $3,650. I’ll notice $3650 — that’s 73% of my Roth contribution for the year.
For me, the right answer is an allowance — but you have to stick to it. My wife thinks her allowance is for stuff she wants — I tell her it’s also for stuff she “needs.”
It’s called a budget, folks. Call it “fun money”, “mad money”, “allowance”, whatever you want, but allocate yourself some amount of money that you can use as your toilet paper if you wish, guilt free. The more debt you have and/or the smaller your income, the smaller this amount will be, but there should be something there nonetheless. It renders this entire thought process moot.
Bonus tip: allocate your time this way as well and Good Things will occur. You will no longer feel guilty about free time, even if you just veg out on the couch. (see The Now Habit, in particular the parts about the Unschedule).
I agree. Starting this year, my husband and I established an “allowance” for each of us to spend on whatever we want. It’s made a big difference in my attitude. Now when I have money left in my budget because I didn’t spend it all, it’s easy to throw it all at debt or savings. Previously, I would use any “leftover” money for unbudgeted fun stuff. It was harder to prioritize my fun (flower seeds or move night with the girls?) when I didn’t have a set amount for it. Now I spend it guilt-free based on what I value most.
I don’t hesitate on small splurges. It’s rare that a few bucks can provide so much excitement.
Once I found a pair of shiny red gogo boots at the salvation army for $4. I’m a jeans and t-shirt girl so it was an unlikely purchase but I wore them to two parties (one wig party, one halloween party where the boots and a hand-screenprinted t-shirt I made equaled a wonderwoman outfit) and then re-donated them. Each of those experiences was priceless… for $2 a pop.
I’m just bummed we didn’t get to see the dress! ;)
Sierra,
My husband and I have adult allowances, and it’s been great for both of us! I highly recommend it.
At the same time, I feel like you feel a lot of guilt about perfectly fine purchases. I’ve read articles expressing your guilt on a trip to Argentina (which you budgeted carefully for), fixing a broken shower and now a beautiful $8 dress.
I think your frugality is great (like the heating bill example, wow!), but at the same time I wonder if it’s taking over your life?
It sounds like your family is doing a great job getting finances in order, so you should enjoy your money when you can afford it! What’s the point in having good personal finance if you can’t spend $8 on a rare whim without overanalyzing it?
I love reading The Simple Dollar and Ramit, and I don’t think either of them would have a problem with an $8 purchase you’ve been dreaming about since high school.
Enjoy your dress and wear it to a fun event. It sounds beautiful.
So. Many. Words. To say such a simple concept. Such stretched attempts to make blog essays. These guest posts kill me sometimes. I miss your writing, JD!
I do not feel guilty for small splurges because I plan for them. My indulgence is a movie every month or two. I attend a matinee after I drop my son off at school. (I do bring my own snack, though. Concessions are overpriced and I don’t like what’s on offer.)
I also budget for things like high end shampoo and other bath products. They are something I really enjoy, last longer than drugstore versions because I use less and I find if I surround myself with a few, well chosen luxuries, my spending stays on track. I don’t feel deprived and go on a spree.
And Sierra, I want to see a pic of the dress!!!! Pretty please!?
It’s easy to think of clothing purchases as inherently frivolous if you already have enough to cover your body, but I think it’s more complicated than that. Wearing new types of clothes can let a person feel differently about themselves. It can be a very interesting experiment. This dress—apparently an unusual style for you—spoke to something deep inside of you; wearing it will let you experience yourself in a new way, perhaps related to whatever qualities you associate with the flapper era. I’m so glad that you purchased it. And what a bargain too. To me, it sounds like a win-win purchase all around.
This is the reason why my wife and I have our set personal spending accounts, every Monday a certain amount is deposited and it is up to me (in the case of my account) to figure if I should save it to splurge on a larger item or spend it that week on small items. That way I don’t have to justify the expense or feel guilty since it was already budgeted.
I try to make permanent changes in recurring expenses that save money. For example, we went with a cold water wash which saved an average of $10 per month in gas. I replaced all our lights with CFLs which saves about $10 per month. The occasional splurge does not represent that much in the total.
You must have really expensive electricity and gas if doing those things saves you so much. Our electricity is only around $50 a month in the non-summer months, so it’s impossible that moving to CFLs would save us a 1/5 of that. Either you have A LOT of lights on all the time or you have exorbitant electricity.
Saving 10$ per month on electricity by switching to CFLs is perfectly reasonable.
Just an example:
In our washroom, we have a light fixture with 5 incandescent regular base lights that consume 60 watts each. Switching to CFL that consume 13 watts (equivalent to 60 Watts incandescent lights) would save 47 watt/hour per light. We use the washroom about 2 hours in the morning and 2 hours at night so about 4 hours per day (we only have 1 bathroom for the entire family).
Take the 4 hours per day, multiply by power saving and multiply by days in the month:
4 hours x 5 light x 47 watts/hours x 30 days = 28,200 watts or 28.2 KW. That is the amount of power saved.
If you use air conditionning during the summer, you actually need to multiply this figure by two (or more depending on the efficiency of your AC unit) to account for cooling cost associated with the heat generated by the incandescent lights (whatever energy is not converted to light is lost as heat).
Since electricity is about 10 cents per KW on average in the USA:
28.2 KW x 0.10 $/KW = 2.82$ saved per month by switching 5 lights or 5.64$ saved if you include the cooling costs.
as you can see, it is not unreasonable to save 10$(or even more) by switching to CFL lights. Of course, the more used a light is, the better the effect of switching it.
Another example:
In our rather large basement ALL the 12 lights are controlled by one switch (! poor design indeed!). We use the basement to workout 2 hours per day x 7 days a week. Switching those 12 lights to CFLs is a very good investment.
I DO tend to feel guilty about small indulgences for myself. But I’ve come to realize that I need to make space for them in our budget so I’m taking reasonable care of myself and not getting bogged down in the seriousness of our goals and taking all the fun out of it. I love the idea of $8.25 worth of fun. It sounds like something I would have called it! I can’t say I agree with the quote you reference from Ramit Sethi. It’s not about each and every small detail. It’s about developing consistency with better behaviors and those will only be beneficial if you increase your income. I know so many people who make far more than we do but spend themselves into debt anyway! I’d have bought the dress too. And felt guilty as well! But don’t. I have a feeling you’ll enjoy it for years to come.
I hate to be the Ramit-defender, but writers consistently misstate his philosophy on the “small things.”
His point is not to forget about those things and go for big wins. It’s to spend most of your energy securing big wins, and picking which small things you will also include in your cutting. If you don’t care about name-brand paper towels, then don’t buy them. Get Target brand. He constantly says be merciless in cutting things that aren’t important to you so that you have the money to buy things you want. That’s it.
As for this post, I have to agree that it was much ado about … nothing. The whole “I felt guilty” afterward is a bit annoying and I find writers tend to say that to elicit the “No, it was fine! You deserve it!” responses from the other frugals.
It’s $8.
It’s a cup of coffee.
It’s ::insert other inconsequential purchase::
If you are aware enough to realize that this is not something you can do every day, then you probably aren’t in danger of blowing your budget bit by bit.
Or don’t buy paper towels at all. (Do people really spend money on these things?) Sorry if this sounds holier-than-thou, because it’s not intended that way, but I use [kitchen] washcloths to clean up a spill on the counter, and rags to clean up a spill on the floor. Sometimes I’m a bit surprised to see how things that didn’t used to exist at all are now considered necessities. Environmental consequences aside, it’s fine if you want to spend money on paper towels (either the good ones or the cheap ones), but it is far from necessary.
As a natural saver, I’m all too familiar with the idea of feeling guilt over spending money. Unfortunately for me, it’s any spent money, whether the electric bill or entertainment. I used to track exactly where my money went but had stopped doing so. I’ve gone back to the basics and just recently put together a spreadsheet with budgeted amounts for all my spending categories. Now, when I start to feel that panic of “Oh no, I’m spending too much money”. I can look at the sheet and confirm I’m only spending what I had planned. As far as a good way to make room for small splurges, I agree with having a category built in for allowance or fun money. For me, having a preset amount is a great guilt reliever.
Red flags go up for me on $10 purchases also. Not because of the purchase, but because I’m afraid I’ll start getting in the habit of dropping $10 here or there and it will add up before I’ve realized it.
The ROI on the dress was probably pretty good. I’d imagine you made more than $8.25 writing this article about it.
That’s actually a really good point about unintended consequences. Most people probably don’t consider how far-reaching a purchase can be. Sometimes a small purchase can bring in more money (like in this case), or it can drain you of money in the future (if you splurge on a latte, and end up even weaker-willed in the future, and it turns into a 4-dollar a day habit).
The consequences of a purchase can be further reaching than just $8.25 out of your pocket. But who can ever foresee all the possibilities?
I am not that obsessed about my expenditures small or large as long as 1) they have not compromised my savings plans (pay yourself first!) 2)I can pay the bill off monthly without resorting to dipping into my savings to make up the difference between my expenditures and my income. If I have to dip, then I know I am over the line and I’ll work harder the next few months to reign in spending.
I find it exhausting and almost anti-living to fret over every penny all the time. Keeping one’s guard on full alert at all times over pennies and dimes is, IMHO, too much needless stress. If you have met your savings goals first, then paid your bills, the rest should be yours to do as you please.
I think seth’s theory is spot on for people who have good jobs in this economyu, work in a field where they can negotiate jobs, dont have to worry about child care and so on. Personally, Im on a pension. I also have a couple income streams, but it is just as effective for me to save money as it is to make money. By cutting coupons, I feed myself and a college kid on about 150 per month and we eat well. I would rather spend that time cutting coupons and organizing a shopping list (while sitting on my patio with a tall drink) than I would leaving my house, dressing up and working for the difference.
That said, wear the outfit, enjoy it and when you tire of it return to the consignment store and resell it. Ive done that on amazon with more than one book that didnt serve my needs.
I’ve been the person agonizing over a 25-cent candy bar, back when $25 had to feed two adults for a week. Now that we’re on more secure financial footing, our allowance has been $30/week apiece for several years. This covers our hobbies and any little extras(magazines, etc); if we don’t spend it all, we can save it up for something big (i.e. $1200 spinning wheel).
I look at the allowance as my “living now” money. I have a tendency to worry over the future, so it took a while to get used to having money I’m supposed to spend — no guilt, no excuses necessary. But it has been very helpful for my mental health to realize that every dollar doesn’t have to be earmarked for bills or retirement. It’s a reminder that it’s okay to live today, too.
I find some of my counseling clients overdo the frugality when they first decide to prepare for homeownership and can’t sustain the effort over time. If you go from spending freely to cutting out every extra, you won’t last long.
I advise folks just starting out to pick a splurge that they engage in intentionally. But I suggest they don’t do it in an area that is a weakness for them.
So shopaholics shouldn’t give themselves permission to buy a pair of shoes on sale. A more appropriate splurge would be getting nice carry out from a gourmet deli to eat in a park, for example.
So Sierra’s splurge sounds perfectly reasonable to me. Shopping doesn’t sound like her weakness and I don’t think her $8.25 dress will send her into the world of wrack and ruin. :)
Guilt is a very unproductive emotion. We can spend so much time feeling guilty, we never get anything real done.
The purpose of frugality or money management is not for its own sake. But to support an interesting, meaningful, and sustainable life for ourselves and our families. If a $8 dress fits into that framework, buy it and have fun.
If it doesn’t, don’t.
I do like that Sierra and all the commenters mentally rounded $8.25 up to $10. I know I’ve taught my 5 year old to look at a price tag that says $1.99 and think “two dollars”.
Marketing research says we’re in the minority, but I bet that kind of mental habit is a big step toward frugality.
$8.25 is almost nothing to spend on a dress! Of course it all depends on your budget… but personally, I like having nice clothes, and I find that dressing well is a great pleasure in life. I wouldn’t feel guilty about an $8.25 dress purchase, I would feel like I got a great deal, especially if I love it and will wear it.
I’ve developed a new rule for myself over the past couple of years – if I try something on and right away it makes me smile or laugh (in a good way, because I’m happy), buy it! Because I know that those kinds of items – which are few and far between – will be items that are good colors for me, that fit well and look good on me. So I’m smiling! And therefore, I will wear them. I’d feel a lot more conflicted over buying something I sort of like and might wear occasionally than I would over an $8 dress I loved. Enjoy the $8 dress with abandon!
I have a set amount of money each week for groceries and incidental expenses. I can spend all of that money on earrings from Etsy if I want (I don’t have set rules for myself with this money), but then I don’t get to go grocery shopping that week. I transfer all other money each week into a different account for savings.
It only took a week or two of “oh, I’ll just buy three bottles of that nice wine since I like it soo so much” or “Shoes. This week. Today”, and having to eat the last-resort stuff in my pantry, to convince me to be more careful about mindless splurges.
One mindfully purchased $8 dress a month–or a week, hey, why not, if that’s what floats your boat–seems fine to me, as long as you have savings and stuff. Which this person does.
“Any one of those purchases may be trivial, but the habits those purchases feed can get expensive.” YES! Spending $8.25 on something fun is not something I stress about, but that’s because it’s not something I do very often. If I splurged daily to the tune of $8.25 (and let’s face it, it would be easy to do… lunch out one day, a book on amazon.com the next day, a thrift store find the next day, a couple magazines the next day….) that’s $3,000 per year! I suppose I could “afford” it, e.g. I wouldn’t lose my house or go into debt, but my savings would be smaller and I seriously doubt I’d be much happier because of these splurges. I’m happier packing my lunch, using the public library, and splurging once in a while when I’m confident it will “pay off” — sounds like the flapper dress is one of those exceptions for you! Enjoy!
I don’t follow a weekly budget for fun money, but try to keep it under $100 per month. I probably only go out twice a month or so, so it counts for drinks out, a few impulse purchases, and the snack machine at work on those days I just don’t feel like carrots.
One of my problems is that when we do go out, it sometimes turns into a bunch of get togethers in quick succession. Take last weekend:
Friday – $16 dinner, $12 drinks
Saturday – impromptu “girls night out” $30 drinks
Sunday – $8 breakfast (a friend crashed after girls night), $20 in random shopping
Total: $86, or most of my monthly budget in 48 hours!
Now, this is definitely not typical for me. I can’t remember the last time I went out two nights in one weekend. Also, I agree that going with friends who enjoy shopping can influence decisions I would probably say no to if I was alone.
Do you ever feel like if you start spending, it becomes easier and easier to let money fly out the door? Maybe that’s why some of us keep such a tight grip on our wallets… worrying over every little purchase keeps the floodgates from opening.
Yes! DH refers to this phenomenon as “she’s loosened the purse strings.” I can go a really long time without shopping, but then when I do make a shopping trip, will often do a few in rapid succession before I “tighten the purse strings” again. We also call it the “Drunken Sailor” phase vs the “Frugal Living phase. As long as the Frugals far outnumber the Sailors, we should be doing OK!
I really loved this piece, which I think has a real kernel of wisdom at its core. Thanks for sharing it.
For me, an occasional splurge reminds me of how in control of my money I’ve become, and that psychological value is an important bonus beyond whatever pleasure I’d get from the puchase.
I recently bought a $35 used book. I’d read the book years ago and had wanted a copy for a long time, but used copies were running $50-$75, which seemed too high to me. (It’s an out-of-print title with lots of glossy pictures–thus the cost!) Was buying it logical? Did I need it? Probably not, but it felt good to finally own it and to know that I exercised financial mindfulness in acquiring it. And, with my finances in good shape, the splurge won’t ruin my life.
Sierra,it’s good that you’ve made habit of conscious spending.
Enjoy your dress. Don’t wait for a special occasion, make the occasion special by wearing your dress. Maybe an at home date night or just because. The frugal thing is to get $16.50 of enjoyment out it ;)
I’m just like you – I stress over the tiniest little “splurges.” Even when I get a little birthday money or something, it’s still really hard for me to actually spend it because I STILL feel guilty. Thanks for your perspective in this post!
I haven’t finished the article, but if I read correctly, it’s not a splurge, it’s an expense you’ve been planning for since you were a kid.
So, there, put a checkmark in your list of “life goals accomplished”. Now make sure to wear it and have fun or organize some sort of 20’s summer party and you’re gold.
Now, that party could be a splurge, so you’d better plan it– there’s always next summer if you don’t have time this one.
I think I need to buy a grill. Costco has some nice ones for $300 right now.
Should I splurge, O GRS?
Or should I save for a Minnesota-Toronto road trip?
Eeeehhhhhhh?
The trip is tax-deductible BTW. Oh I gotta get out of here and make some gin & tonics. The summer is terrible for my work ethic.
Do the adult allowances – it eliminates ‘the guilts’! Neither one of you has to justify a splurge – it is your fun money and you can do what you like with it. After I implemented this in our budget I was liberated!! :)
I think the “Splurge” was a great deal. $8.25 generated more than 80 comments! That’s 10 cents per comment, and a free dress thrown in!
-Mike
We have a mad money account of $50 every 2nd friday, and $25 every non-50 Friday. This works out to 150/month each, or $300/month total for the adult allowance. We each use this money for different things.
I use mine for video games, books, and computer-related items.
She uses hers for craft projects, movie tickets, and Slurpees.
I haven’t had the time to have fun lately, so I ended up buying some stocks (as a trial experiment). Everyone needs a little excitement, but making it an official number means that you find ways to cut corners (waiting for video games, using coupons for craft supplies), and generally spend less than the “buy whatever I want” plan. The adult allowance is an expense-limitting program, rather than increasing.
My wife Veronica and I live frugally by choice. We have read books like ” Money Ratios” by Charles Farrell and “The Number” by Lee Eisenger and enjoyed them, but they only confirmed that we have our “number”.
This brings us to today’s issue: splurges. It is very hard for us to imagine a financially sound household worrying itself to the point of guilt and self-loathing over an $8 party dress from a second-hand store. In such a case frugality has migrated into neurosis.
This, however, is all too easy unless you adopt certain strategies. “Mad money,” an “adult allowance” what have you. I think these terms are somewhat demeaning. Why not just have a “fun” budget, if you need a name for a line on a budget planner.
We used to worry about the cost of vacations (when there was really nothing to worry about as we were ahead of our saving goals). We solved the problem comepltely by adding a line in the budget for “vacations”. The problem shifted immediately from “Oh, God, $4K for a vacation we don’t NEED!” to “how can we spend out the vacation budget line?” This was a more pleasant problem, and it added nothing to our spending.
I’d just like to see a photo of the dress. It sounds fun and fun once in a while is good for you!
Sierra, I thought this article was best for its critique of Ramit’s new philosophy. He’s focused more and more on “big wins” over the past few years, to the point where he’s now actually saying that the “small wins” are a waste of time. !!!!
I’ve always felt that the “just earn more” mindset was foolhardy. Almost everyone struggles with lifestyle inflation – the more you earn, the more you spend. Not learning to put a cap on your habits is a problem.
To this, you’ve added the critiques that 1) if we’re in the habit of buying small things thoughtlessly, we’re MUCH more likely to buy big things thoughtlessly, and 2) the big wins are rare, and you can’t always count on them.
I think Ramit’s trying to solidify a single financial platform, and I think it’s weakening his advice.
I haven’t read all the comments, but I remember distinctly when JD was fretting over 2 or 3 scoops of cocoa in his hot chocolate. It wasn’t til some of us told him to lighten up a bit and enjoy life that it seemed to click.
I hate shopping with other people because 1. I don’t like others to know my shopping habits–how much things cost, etc. and 2. I don’t need anything. :)
Yard saling would be different, however.
You’re right, $10 isn’t enough to feel guilty over and I’m exhausted just reading your long angsty post. I’m glad I don’t suffer over my splurges and martyr myself like you do.
On the flip side of this coin, by spending that $10 you are supporting a small business owner, a charity, a consigner who is trying to declutter and make some extra cash, or a shop employee who depends on an hourly wage when you make that purchase (depending on what kind of thrift store you visited). You are also supporting a community institution–if no one bought those party dresses, the store wouldn’t be able to afford to stay open, and it would close its doors. You and your fellow neighbors wouldn’t be able to shop at a quirky thrift store anymore and would have to shop at another chain instead–more expensive, more resource-heavy, and probably more money that goes to a corporation rather than staying in the community. So think about that the next time you think about “splurging”.
We each get $20 a week to spend however we want. Neither of us spends that much per week so we tend to accumulate the money and end up spending it on bigger purchases. For example, my husband spent his accumulated allowance on music. I often save to get a new purse at the big art/craft show in September. By doing this, we don’t feel guilty about taking any of our purchases.