We all spend our money on different things in life. Two people can each make $150K per year, yet one of them drives a $75K Mercedes and the other drives a Honda Accord. But, why is that?
I’ve always been fascinated ever since I was a little kid about how people spend their money and what they’re spending it on. In Ramit Sethi’s Book, “I Will Teach You To Be Rich” he stresses a tremendous amount on living a rich life. But, everyone has their own rich life. You might be the person that needs that fancy car. Great! Oh, I know you’re the person that goes to Starbucks every day and orders the $6 latte. Great! I think you get my point. We all spend money on different things in life, but I think we need to ask ourselves:
“What is triggering us to make this purchase right now, and is it going to make us happy?”
Now, I’m not a CFP (certified financial planner) or have any designations or have passed any certification tests. But, I’ve been investing since I was twenty years old and have a pretty solid understanding of money and how the stock market works. But, what I really have always been fascinated with is why people spend the money the way they do.
I call it “Money Triggers.”
I grew up in a middle-class family. Mom is a teacher (still is) and my Dad has his own contracting company. Now, my parents are no experts with money, which is why I developed a passion for personal finance. All I heard growing up was, “Debt is bad.” My Dad used to say that all the time to my Mom and sisters and it became ingrained in my head. But, something my parents did teach me was to spend money on the things that make you happy. After learning more and more about my parent’s money situation, I learned that they could afford many things. But, the fancy car didn’t really do it for them they used to say. Many of their friends were driving $75K Mercedes, had a huge mortgage, and just debt piled up to the ceiling. But, why?
“People will spend money on things to impress people they don’t even care about.”
I’ve realized a lot of people in the middle class buy things to impress people. For what reason? Not sure. That could be a whole other article. It could be insecurity, wanting to look good, making it look like they’re doing well when in reality they aren’t. Who knows? There’s a lot of psychological reasons that go behind why we purchase the things we do. I spend money on the things that make me happy. And for me, it’s always a question of, “Do I really need it?”
I do this exercise pretty frequently and I encourage all of you reading this to try it and see for yourself. I took out a blank sheet of paper and wrote down the things in my life that make me happy that I need to spend money on. Here’s what I came up with:
- Eating out for dinner (more on this below)
- Wine
- Experiences and vacations
- Food
- Technology
That’s really it. I like to do this routinely, and yes it does change. But, it stays pretty consistent with what I mentioned above. One of my favorite things to do in life is to go out for dinner with the people in my life I enjoy spending time with. Do I do this every day of the week? No. One of my main goals in life is to get to the point of being able to eat out at a restaurant I would like to at least four days a week. Do I do that now? No. Can I do that now? Yes. I’m not at the point in my life though where my monthly savings goals would align with my money triggers and income. Wine. Yes, I love wine. Am I an alcoholic? Haha, no! My family is Italian and my Mom would give me and my sister wine when we were young at the dinner table, and I just always enjoyed the taste of it. I like trying new wines and going to events that serve wine. I aspire to have my own wine label one day. Experiences and vacations. I enjoy having new experiences, whether that be taking a class, attending a seminar, etc. These make me happy. Taking vacations make me extremely happy. One of my favorite things to do in life is to go somewhere new and have an adventure. I think all of us could attest to that. I love to cook. Buying food and trying new recipes. And lastly, technology. I use technology every day. I think pretty much all of us do. But, it is something that benefits my life and makes it better. I don’t think technology is a bad thing at all. We just need to use it for the better.
When people tell me, “Oh, I wish I had more money or I spend too much on such and such.” Look at your money triggers? Seriously, write down what you spent money on this past month, and how much. Some of you will be very surprised. Then, take out a piece of paper and write down what makes you happy and what you need to be spending your money on. It comes down to your habits and triggers.
So what’s your money trigger?