How to spend more? (AKA, how to avoid being a miser)

Question

I was blessed growing up to have a father that greatly impressed upon me the need to save. I am very thankful for his influence, it has allowed me to make smart decisions with my money and I am currently living completely debt free -- except for a mortgage on a house which is about to turn into a rental and actually provide positive cash flow.

This may seem all good and dandy, but I find recently that my dad's emphasis on saving has turned me a little ... well, stingy.

I spend hours researching two comparable products to try to save $3. I refuse to buy any mobile phone app unless I've tried and loved the free version for over a year. I spend hours on the phone complaining to my cable company, only to be satisfied to argue my way into a $5 credit. I put two months of work into a home improvement project that a professional could have done in a weekend just to save money by doing it myself -- when in fact I could have paid him and taken a couple of side jobs and made back twice the money in 1/10th the time =/

In short, I don't think I'm valuing my time nearly as much as I should. I'm in a healthy financial situation. But I'm looking for tips on how to feel free to spend more money (smartly).

This has been a tricky one to Google or search for, as most people are asking the exact opposite -- how do I spend less. When in reality, I'm looking to spend more. How can I avoid being a miser?

Answer 1

I spend hours researching two comparable products to try to save $3.

Me too! I have also argued for hours with customer support to get $5/month off a bill (that's $60/year!), and I feel guilty every time I eat out or do something remotely luxurious, like getting fries with my $1 McChicken. Geez, even when I play video games, I hate spending the in-game currency. For me, it's obsessive-compulsive traits that cause it, but please note that I'm not claiming @Eddie has them. Just speaking for myself here, but I hope it helps. I still struggle with my miserliness, but I can share what works for me and what doesn't.

I don't think I'm valuing my time nearly as much as I should.

Me neither, but knowing that doesn't help; it makes it worse. For me, putting a dollar amount on how much I value my time does not work because that just complicates the problem and amplifies how much time I spend solving that multi-variable optimization problem. Consider trying to convince Monk not to avoid germs in order to build antibodies; it just makes him think more about germs, raising anxiety and making easy decisions (use a handkerchief to touch doorknobs) into a hard decision (should I touch it or should I not?). It also amplifies the regret whenever you finally make a certain choice ("what if I did the calculation wrong?" or "what if I'm going to get sick tomorrow because I touched that doorknob?"). Making the problem more complicated isn't the solution.

So how to make it simpler? Make the decision ahead of time! For me, budgets are the key to reducing the anxiety associated with financial decision making. Every six months or so, my wife and I spend hours deciding how much to spend per month on things. We can really take our time analyzing it because we only have to do it occasionally. Once we set $50/month for restaurants, I no longer have to feel like a loser every time we eat out -- similarly for discretionary spending and everything else. TBH, I'm not sure exactly why it works -- why I don't regret the dollar amounts we put on every budget -- but it really does help. I join my coworkers for lunch on Fridays because I already decided that was okay. At that point, I can focus my OC-tendencies on eating every last gram of organic matter on my plate. Without directly touching the ketchup bottle, of course. :)

Again, just speaking for myself, but having budgets has done wonders for my stress level with respect to finances. For me, budgets are less about restricting my spending and more about permitting me to spend! It's not perfect, but it helps.

(Not that it's relevant, but I reworded this answer about 20 times and only hit 'Post' with great effort to suppress the need to keep editing it! I'll be refreshing every 30 seconds for updates.)

Answer 2

The key question is this - What brings you happiness? How much is this behavior actually making you miserable?

It's possible, and important, to find balance between frugality and as you say, being a miser. It's also important to understand the diminishing return, and to value not just your hour of time but your happiness-hour. By this I mean there's a distinction between an hour arguing with a customer service rep and spending an hour on a project yourself. There are countless people who push a lawn mower around every Saturday even though they have the money to hire a mowing company. Fresh air, exercise, quiet time, for them it makes sense. We pick and choose. The happy mower is in a good place. The miserable mower who hates doing it and just won't spend the money, not so much.

Frugal simply means not wasteful, but it can be misunderstood to mean cheap. When our brand of TP is on sale, I'll use coupons, and stock up. Unless you visited and peeked into a cabinet, all seems normal. A visit to a friend's summer home taught us the value of packing a few rolls for a weekend visit into the unknown. Her cheap brand was like sandpaper and every item in her house was a strange brand I'd never heard of, including food items well beyond expiration. She took cheap to a new level.

In the end, this question is less about finance than about psychology.

Answer 3

Unless your stinginess has reach truly compulsive levels, it should be enough to consciously remind yourself of the value of your time when you make purchase decisions or find yourself chasing minor savings.

Another way might be to deliberately give yourself a monthly or weekly budget that you're allowed to "waste" on luxuries and conveniences without worrying.

Answer 4

There was a study last year -- it was all over the news -- that concluded that experiences, not stuff, is what makes people happy. The satisfaction from going on vacation lasts even after the holiday is long over. That new gadget only gives fleeting satisfaction.

To that end, I recommend splurging on the affordable luxuries that give you a better experience. For example, I'm a big believer in paying the skycap a few dollars to check my bags at the curb rather than wait in line at the airport because I HATE airports. Valet parking is another affordable luxury when the alternative is circling a busy parking lot for 15 minutes. Pay for the better seats at the show. Get a room at the nicer hotel. Eat out a bit more often.

I can't imagine willingly spending hours with customer support, though. They can have my $5.

Answer 5

I agree with JoeTaxpayer's answer. The question you should be asking is not "how do I spend more" but "how do I become happier". From what you say, it may be that you could increase your happiness simply by cutting back on these aggressive attempts to save a few bucks here and there.

At the same time, if you do this, on some level your personality is probably not the type that would allow to simply "forget it". I think many frugal people are somewhat as you describe: they don't like wasting money. In such cases, often what matters is not so much the actual saving money as the feeling of saving money. Therefore, I'd suggest that you take a look at which of the "money-losing" activities you mention are really worth it.

The easiest ones to drop would be things like the home-improvement project, which even you acknowledge does not save you money. If you like saving money, give yourself a pat on the back when you hire the contractor. If you want, run the numbers so you can "prove" to yourself how much money you are saving by not doing the work.

For some of the other things, it may be that spending time to save a small amount can "gamify" an everyday experience and make it more interesting. For instance, comparing products to save a few bucks is not necessarily bad unless you actually don't like doing it. If spending a few hours comparing two toaster ovens on Amazon or whatever makes you feel good, go for it; it's no worse than spending a few hours watching TV. By acknowledging that you get something out of it --- the feeling of getting a bargain --- and savoring that, you can feel better about, and also potentially "get it out of your system" so that you won't feel the need to do it for every little thing. We all have our little pet obsessions, and it's possible to acknowledge that they're irrational, while still accepting them as part of your personality, and finding a way to satisfy them in a controlled manner that doesn't stress you out too much.

Answer 6

Do you plan a monthly budget at the beginning of each month? This might seem counter-intuitive, but hear me out.

Doing a budget is, of course, critically important for those who struggle with having enough money to last the month. Having this written spending plan allows people struggling with finances to control their spending and funnel money into debt reduction or saving goals. However, budgeting can also help those with the opposite problem.

There are some, like you perhaps, that have enough income and live frugally enough that they don't have to budget. Their money comes in, and they spend so little that the bank account grows automatically. It sounds like a good problem to have, but your finances are still out of control, just in a different way. Perhaps you are underspending simply because you don't know if you will have enough money to last or not.

By making a spending plan, you set aside money each month for various categories in three broad areas:

• Regular monthly bills (housing, utilities)
• Daily/weekly spending categories (groceries, household items)
• Longer-term saving goals (your next car, for example)

Since you have plenty of money coming in, generously fund these spending categories. As long as you have money in the categories when you go to the store, you can feel comfortable splurging a little, because you know that your other categories are funded and the money is there to pay those other bills. Create other categories, such as technology or home improvement, and when you need an app or have a home improvement project, you can confidently spend this money, as it has already been allocated for those purposes.

If you are new to budgeting, software such as YNAB can make it much easier.

Answer 7

"How much is your time worth"

This has been useful for me, judging things based on how much their time value is worth to me, weighted more heavily than their actual worth.

For instance, there was a time when I used to work on the weekends and pay to have my laundry done. Doing the laundry myself would have cost 25 cents, but taken two hours at least. Since I was making $45 an hour, I would have lost $90 dollars by doing my laundry, instead of paying specialists $28 to do it for me, much better than I would.

Your own capital should begin growing at a rate that makes many MANY things worth less than the time it takes for you to entertain it. So in your cable bill example, you shouldn't have argued for a $5 credit for two hours, unless you make $2.25 an hour, after tax. This is simplistic, as you would extrapolate how much this would cost you over a year or two, but such cost benefit analysis' become easy with this simple concept.

This can also be used to rationalize your lavish expenditures. Such as not really comparing the costs for a flight, because its a 2 hour flight for $400 and you've found yourself making at least $200 an hour with your $416,000 annual earnings and capital gains.

This will cure your frugality while retaining safe guards on your spending.

Answer 8

It took me a very longtime to learn that I no longer need to live like a starving student... and even now I live like a well-off student. And that's OK -- my needs and tastes are mostly simple. There's no reason to spend just for the sake of spending... but if you want something, and really can afford it after setting aside savings for retirement and emergency funds and basic operating capital, go for it.

It may help to pick out a specific thing you want, or want to replace. My "rules" used to say that i was always allowed to spend money on books, music, and needed tools. Then i convinced myself that shelves are tools for storing other things. And that furniture is shelving for people. And that art, if it really speaks to me, is akin to books. And that a decent instrument is a tool. And that my time has value, so sometimes it's less expensive in real term to throw money at a problem rather than scheduling my life around it.

One step at a time, with all the steps making sense.

I will still spend entirely too long agonizing over minor purchases, at times -- but that's about convincing myself that I like the choice I'm making, not about the price per se.

Meanwhile, saving means you can buy things later without having to borrow. The semi-student routine , and waiting until i was ready to buy,is why i had the value of a house in my investments when i was ready to buy one. And is why I'm almost at my target number for retirement well before my planned retirement date.

One other thought: if you're comfortable buying gifts for others but don't tend to spend on yourself, you aren't a miser -- just frugal.

Answer 9

@pyb is right - you should put an hourly dollar value on your time.

Calculate a realistic number and keep it in the back of your mind. Then when you're looking for a discount or a saving, estimate the maximum amount that you'd be able to save.

This should be a realistic proportion of the value of the item.

From those figures you can get the maximum amount of time that you should spend on looking for that discount. Spend any more than that amount of time and you lose money even if you get the discount.

So then you can end up with a few rules-of-thumb like "don't spend more than x minutes of time per dollar of possible savings".

Then you can spend the spare time you've created on looking for savings on big-ticket items where the time is more efficiently used... or on studying to upgrade your earning potential... or on taking some time out to enjoy the world and sniff the flowers. :)

Answer 10

here is what I have learned with multiple close encounters with bankruptcies:

• ask yourself.. what if I save vs what if I spend? say you like a new shirt.. ask yourself what can you do saving $40 vs rewarding yourself/your well wishers right away? you will end up spending.

• just like you the other person needs money. he/she is doing a work. ask yourself what if you are in his/her situation. you would obviously want others to be happy. so spend.

I think these two should be good. I must add that you should NOT be wasteful. Eg.. buying a handmade shoes vs corporation made shoes? choose handmade one because it fits above two. buying a corporate one would be more polluting and less rewarding because you just gave your money to someone who already has lots and cares least about you.

in what way are you saying mortgage is good? I see that as a waste. you can pay back your mortgage only when someone takes even bigger mortgage (check with some maths before refuting)... in other words you have taken part in ponzi scheme.! I would suggest making a house vs buying one is better spending.

finally spending is a best saving.. don't forget that you are getting money only because someone is spending wisely. stop feeding your money to corporates and interests and everyone will have plenty to spend.

Answer 11

People who choose "good enough" (satisficers) tend to be happier than people who choose "the best" (maximizers), see link. So decide you want to be a satisficer for most decisions, and then work at it: deliberately limit the amount of time you spend on a small decision, and celebrate a non-optimal decision. Decide to be good to yourself, and say it out loud. Practice the skill.

Answer 12

Hehe, I feel your pain.. well, 'pain' isn't really the feeling though is it.

I was unemployed for several years when I was younger, and I loved it. It taught me 2 things: you need to be careful with your money, and you don't need money to be happy. I loved the freedom, the carefree attitude I had to the world, the ability to do many things not constrained by having to spend all day in an office, to be with my mates a lot.

If your problem is that you are being too miserly ($3 researching better product... we all do that, though not for $3 except on ebay sometimes) then put a cost on your time. If it took you 3 hours to research the $3 saving, and your time is worth even just $10 an hour to you, then you've not saved anything. You've wasted 'money'.

If, on the other hand, you're more worried about hoarding money and being unproductive and a bad social citizen, get involved in investing it instead. Let someone else put it to good use, whilst giving you some return.

Answer 13

Ultimately, money derives its value from being spend on a good or service. Investing it is an act of denying your present-self a good or service so that your future-self can obtain (hopefully more) goods or services. Investing is a sensible and responsible default position, but you clearly have passed the point at which the opportunity cost of the dollar not spent today is greater than its benefit in the future. Not all dollars are the same.

Remember that money is a temporary store of value but you have to spend it to realize that value. In your search, learn about the "psychology of money." What are you saving it for? How much do you want left over when you die? If you die tomorrow, will you regret not having spend a little more? I'm sorry to get morbid on you, but saving for the future requires answering the question "How long?" and it's never forever.

This may be tangential but it shaped my behaviour towards money nonetheless: Frank Zimbardo on The Psychology of Time. I would hazard a guess and say that you land in the future-oriented camp.

Answer 14

Time is money.

If those hours spent researching to save $3 made you a better profit than you would have otherwise had buying the more expensive product and using the rest of the time to make more than $3, then you came out on top.

If you consider this general premise in every spending decision you make, you should always feel that you made the right choice.

Answer 15

Maybe minimalism is an option for you. Make your self clear what you really want You only buy what you really need and for that you spend the money. Then there is no point of saving money, i.e. I for example like to invite friends and cook them some fancy diner with expensive products, but the value I get from that exceeds any money I spend. On the other hand most present are the opposite, they have less value to recipient than what they originally have costs.