Mindful Spending

Posted on February 07, 2019

With the recent merging of my and my wife’s finances, I’ve been giving a lot of thought to spending. Am I spending our money wisely? Could we be spending in a way that optimizes utility and happiness?

It is a challenge for anyone privileged enough to have disposable income. Fortunately, this is less of a math problem and more of a psychology problem. This is about behavior. I have no interest in analyzing the 50-30-20 rule or optimizing a budget here.

This is some of the best advice I’ve picked up and thought up over the years.

Purchase to alleviate pain, not to increase happiness. In the startup world, there is a concept of building a company or product that is either a “vitamin,” or “painkiller.” The concept can be somewhat analogous to consumer purchases. Are you buying something that decreases pain or suffering, a painkiller? Or are you buying something that (seems to) enhance experience, a vitamin?

Practice active resistance of impulse buying. With all of the signals and societal pressures urging us to upgrade to the latest and best, this is a real challenge. Just like weaning yourself off of soft drinks or fast food, this is something that takes practice. But think to the last time you went through a drive through and felt pride. Impulse buys may bring short bursts of joy, but those highs are fleeting, and then you find yourself impartial to your purchase days or hours later, only to be yearning for something new.

Be charitable, or support things that are given away for free. With the digital age, there is so much we obtain for free. Podcasts, music, and videos all come for free. If there is a podcast or an artist that brings noticeable value to your life, considering subscribing at $5 a month or buying an album. This affect is surprisingly positive and long lasting.

Own the things on which you splurge. Love coffee? Me too. The twelve ounce bag of whole bean coffee I regularly purchase costs me $15.99. That is enough to horrify any baby boomer lecturing a Millennial on the value of a dollar. But I own the fact that I like my coffee, and I mindfully splurge on it, and try to express gratitude every time I’m lucky enough to make a cup at home.

If you are still milling over the first or second bullet point, look up the concept hedonic treadmill. Again, this is about behavior, and understanding this behavior is extremely empowering.

Take a day to purchase nothing. Just like fasting can have positive effects on human physiology, taking a day off from swiping your credit card may be a welcome reprieve from frequent spending. I’ll call this one out as optional, but it is a fun experiment for those who haven’t historically given their spending behavior much thought.