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?
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Whenever I get a paycheque, the first thing I do is put about 70-80% of that money into an ING account: some in my savings proper, some into my emergency fund (until I filled it a few months ago), and the rest into a “holding pen” (where it accrues interest before big expenditures, like tuition). I pay sundry expenses (like bus fare) out of chequing, and any money left in that account I consider mine to spend as I please. I’ve never spent all of it, but it’s nice to have that leeway in case something comes up.
I use YNAB to plan and track my budget, so every month, I allocate some money to my “other” fund. The amount varies, depending on what else is going on that month, financially speaking, and of course, the goal is to not spend everything in the other fund, but throughout the month, if I find that there is something I really want to buy, but have not budgeted for, if the other fund will cover it, I do it. If I have already blown through my other fund, then I can’t afford it.
That forces me to truly think every time I want to spend out of budget. Do I really want to buy this right now and risk not having money for something else later. And the answer varies. Sometimes the answer is yes, I really want to buy this book right now, and sometimes the answer is no, I really don’t need that now.
And frequently, at the end of the month, if there is some extra money in the other fund, I’ll put some of it into my book fund, and hop off to the bookstore to pick up that book I postponed earlier in the month.
Its really a ROI thing (Return on Investment) thing. I like to use the movie example, the only difference when you see an afternoon show is the price, so why doesn’t everyone just go to the cheaper show.
It is the convenience factor! You have to figure is my time worth the difference.
For me, I would wait the 3 day in getting it from Amazon (dont forget to count shipping too!). But if I had to fix my bathroom this weekend and the book was going to help it may be worth it.
What my wife said isn’t something you hear often. She just knew I had been anticipating the books for a while. Both of us are fairly frugal nor do we buy much for ourselves. That’s why we decided to pay the extra.
Now, with that said, the $6 did bug me…that’s why I wrote the article. The question is should it?
If I did it often, absolutely. But I don’t, so I was ok with it as was she.
Thanks for the link and for continuing on with the discussion!
You’re not weird for keeping track of yoru sick days in your head. I think it’s a good plan – it’s much better to know how many sick days you’ve taken and how many you have left (if you get sick days) then to be caught surprised sometime.
I have trouble paying more for convenience a lot of times. My husband is good at helping me overcome that when necessary. Sometimes it’s just worth it to pay a bit more for the convenience (though I hate doing so), like if we’re super-busy or really tired and don’t have the time or energy to do whatever it is on our own. Sometimes spending a bit of extra money for your mental health and well-being is worth it.
We have all our bills, etc. budgeted, but after that’s all said and done, we have “extra” money so if we do go over in a budget category, it’s not a huge deal (that’s not a great way to do it, but that’s the reality of our budget right now). We’re still trying to find the right balance between what we would like to spend in a given category in a month versus what we actually spend. Yes, it would be nice to buy minimally processed food and food in bulk to prepare our meals from scratch, but it’s not practical for us right now. When we allocate our income, we try and account for some of that “convenience spending” in our numbers (but not so much that we just convenience spend all the time).
Megan: I like the “other” fund idea. Hmmm…
If you have a budget perhaps you (and your spouse) should allocate a small “fun-money” category, so you won’t even have to feel guilty about such a purchase (or explain it to anyone, if that’s what you and your spouse agree to). This concept helped my wife out quite a bit when we first were married, because it took a while for her to feel like it was “our” money rather than hers and mine. And my desire to keep records of what we spent started to foster a feeling of “asking a parent” for permission to spend money. Something I definitely didn’t want to foster.
The other thought I had is that, for me, I like to use these types of situations to develop my own self-discipline. I think it’s value for those of us who have made major money mistakes (o.k., everyone really) to learn to DELAY GRATIFICATION. I tend to do this with books, by waiting to get it from the library even if I’m “# 29 of 31” in the request queue like I currently am for “Spend Til’ The End”. Small opportunities to build self discipline will allow me to strengthen my delay gratification muscles and hopefully help me when I struggle with more larger decisions, like wanting to buy too much house or car.
Finding a balance is so important. Without balance you swing too far one way or the other. Neither will make your life better. Being in the middle is the best.
Having fun with your money now, while still saving for your future is the correct balance
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