Gibble recently wrote about a decision he had to make in the bookstore over whether to buy a copy of the new D&D rulebook. As someone with fond memories of cold pizza (warm when we started), soda, & D&D throughout college, I understand his excitement and desire to get it right away.
He found that it cost $6.52 less on Amazon, but he really wanted to read through it as soon as he could. When he asked his wife for her opinion, she responded “If $6.52 kills us, we have bigger problems.”
Most readers agreed with him, though some pointed out that this was a dangerous way of thinking. Reading the comments left me thinking more about what his wife said.
The concern expressed by readers is that most people nickel and dime themselves into debt (or out of saving money). Each time feels like an exception to the budget or the spending strategies/plans they’ve outlined. “Just this once.” $6.52 won’t kill most of us, but an unplanned $6.52 every day for a month would really throw off a budget.
On the other hand, his wife is perfectly reasonable. As I understand it, their family is not on such a tight budget that spending $6.52 more for a book than they have to will cause them any problems. Sticking so tightly to a budget that you make yourself miserable undermines one of the main purposes of budgeting — spending your money responsibly in a way that fits your needs.
Like most decisions in personal finance, this isn’t really a moral one. There’s no hard and fast rule I’m going to lay out. It’s more important to find a balance that works for our financial situation.
I think it helps to come up with an informal algorithm (nothing fancy, just a mental way of judging things) that helps us make the decision when to be flexible.
For example, I have an algorithm like that which I use for calling in sick to work (or skipping classes in college). If I’m not contagious or so sick that working is entirely out of the question but still feeling pretty bad, I call on this algorithm.
I’ve been at the library 6 months and have a) never been late for work and b) taken only 1 sick day. I’ve told myself that one sick day every three months is acceptable. But I won’t use them unless I’m feeling really bad. So if I don’t feel sick now, I can take 2 in the third quarter. Or 3 in the fourth.
Of course, I just like I want to save money for the time when it makes me happiest, I want to save sick days for the times that I feel sickest. I don’t want to use them up on something minor. Of course, if I get really really really sick, I’m going to forget the algorithm, but I’ll take those days into account later on to decide when I can take my next “fairly sick” day again.
If the library had a certain set number of sick days I could take a year (like 8), I’d divide those into quarters, but my position doesn’t get sick leave. So I do what I think is enough to keep my bosses handy. In classes, I always noted the number of days a teacher would let you miss. I almost never used all possible absences, but I did when I had mono.
Maybe I’m weird for working all this out in my head, but I don’t want to be seen by my bosses as someone who’s always calling in sick. And I don’t want to be one of those people who always comes to work even when they’re sick (and possibly contagious). Neither of those is good for me or the library. Having this way of looking at it helps me cope.
Back to money, you can set up something similar for yourself. Whatever fits your spending flexibility. If things are tight, it might be $10/month. If they’re looser, it might be $25 or $50.
Your memory may not be as specific about spending as mine is about absences, so I also suggest keeping track of this flexible allowance. And work it into your budget if possible.
I think it’s a win-win solution. On the one hand, your budget doesn’t constrain you so badly that you can’t get coffee with a friend (without planning ahead) or spend extra for the convenience of getting your book right away. On the other, you don’t exceed your budget and you feel really good whenever you don’t spend all the money and have some left to go towards your financial goals–saving, investing, debt repayment.
What do you think? How do you stay flexible and happy without undermining your budget or savings goals?