I had an epiphany yesterday listening to a podcast on my way to the office where the guest was Ramit Sethi, author of I Will Teach You to Be Rich. (I know. Cheesy name. Don’t judge until you’ve read the book, however.)
During the podcast Ramit explained that we all have “money dials” in how we naturally choose to spend our discretionary money.
Some folks spend money on Uber rides when they could instead walk.
Some people pay for first class plane tickets while others are happy flying coach (even if they could comfortably afford to fly first class).
Some buy luxury automobiles and others are content driving a Ford Focus.
Some spend money eating out multiple times each week while others are happy to cook at home.
LeBron James is even reported to spend $1.5 Million annually on personal chefs, personal trainers, cryotherapy, dieticians, etc. to stay in top peak physical condition. Yes, LeBron can afford it but I would guess that not many other top athletes with similar earnings are choosing to spend their income this way.
So why do we all have such different spending patterns?
Because we all have certain personal priorities that are important to us and that make us extremely happy and bring joy to our life.
Ramit breaks these “money dials” into ten categories:
- Social Status
Look no further than your checkbook and credit card statement to see where your priorities lie. Where do you spend your discretionary funds?
Although I believe that a handful of categories on the above list are all important to me (convenience, travel, health/fitness, experiences & self-improvement), when I think back to some of my favorite “investments,” hands down, convenience stands out above all the rest.
As you’ve read in other blog posts, I LOVE paying for the privilege of having my groceries delivered to my kitchen every week. (You know I’m messed up when I run into my personal grocery shopper in the Publix parking lot and I feel guilty, like I’m cheating on him, as I run into the store to grab a few items mid-week!)
I’ve paid for laser hair removal treatments so I don’t have to shave my legs anymore.
We own an automatic cat litter box that cleans the cat litter after every use. I only have to empty the bag in the receptacle once a week.
We have our house deep cleaned weekly by a cleaning crew. (When my husband suggested we throttle it back to bi-weekly, I was like “Hellz no. I love coming home to a clean house every week and it motivates me to keep it picked up and spot cleaned daily.”)
We invest in a bi-weekly meal delivery service so it’s easy to plan and whip together a healthy vegan meal for my family after work.
But you know what? I don’t regret any single one of these investments because they all free up my time to do other things that I love (or eliminate doing things that I hate).
I absolutely hate redundant tasks that must be repeated with no end in sight (shaving, cleaning the litter box, cleaning the house, cooking, buying groceries).
So, even though spending money on these services may seem extremely frivolous to many people, convenience is likely not their top priority.
I recognize in reviewing my list that these services are quite a hefty investment but they have grown proportionately over time. Even fresh out of law school making under $30,000/year, I still paid for convenience items and services, albeit on a smaller scale, such as paying the neighbor boy to mow our law.
Ramit Sethi’s philosophy with the “money dials” is that we shouldn’t forgo the expenses that truly make us happy. Buy that darn latte if you want to!
But every dollar is a trade-off.
Ramit encourages spending lavishly (based on a percentage of your income) on the areas that bring you the most joy & mercilessly cutting the expenses in other areas that don’t. Prudent money management strategies should not equate to becoming an extreme penny-pinching miser across the board. What kind of life is that?
With my lightbulb moment that I highly value convenience in my life, it actually is making me even more aware of how I do spend my money and evaluating whether the expense is really a priority that brings me joy or rather, an expense that’s merely become a mindless habit.
For example, as much as I enjoy the social aspect of shopping with family, I am not really a clothes person. I do not need an overflowing closet of stuff I don’t wear. In fact, an overflowing closet now has the opposite effect on me now that I’ve entered my minimalism phase of life. I get stressed out looking at a packed closet. So, I know I can comfortably cut back substantially on clothes and (horror!) shoes shopping.
I bought a used Mercedes SUV a few years back. I got caught up in the “luxury” of the brand. However, after many expensive repairs, I now realize that my money would be better spent on a cheaper, more reliable vehicle. As soon as I’m no longer upside down on my Mercedes, I will trade it in for a more practical vehicle. The extra money I spent on the brand is just not important to me, recognizing that . . ..
The more I cut back in other areas of my discretionary spending, the more money I have to invest in even more convenience services.
Getting one’s finances under control and spending within your means is no easy feat for many Gen X’ers like myself. However, it’s a revelation to understand my natural discretionary spending habits and to now have a lens through which to analyze my spending.
Will this expense make my life easier?
Yes? Then if I have the money, go for it guilt-free.
No? Then save the money for something more important in my life.
I’m curious to hear what YOUR “money dial” is? Post a comment below with your money dial.
Now, if I can just figure out a way to teleport to the office.
Kristen “Convenience is My Middle Name” Marks
P.S. My friend and realtor extraordinaire, Jessica Duncan, actually did find a way to teleport to her office. She invested in a mobile office on wheels and hired a full-time driver. He drives her to appointments all day and she works in the back which she estimates has freed up four hours of her day which used to be spent driving around town. Needless to say, I’m extremely jealous.
P.P.S. We are now accepting reservations for our June 6th 5pm Estate Planning Bootcamp which is a new cost effective workshop to get your simple Will and powers of attorney in order. Details are on our website here.