This post is 1,458 words and a 7-minute read.
I have realized that the number 1 reason that 90% of us suck at handling money is because we suck at the skill of spending money.
I know saying that sounds like an oxymoronic statement. You are probably thinking to yourself, "Skill to spend money? The hell is this fool talking about? How does it take skill to spend money? All I gotta do is swipe, click, tap, or insert. What skill does it take to spend money?"
I felt the same way when I first heard Ramit Sethi say the same thing. However; the more I thought about it, the more it dawned on me that so much of our frustrations in our finances can be brought down to what we choose to spend our money on. Because as much as money is about the numbers on a page, it is also about how we FEEL. Let me explain
When it comes to managing our money there are multiple skills that we have to learn to become better at money:
Learning the language of money. All the financial jargon that you need to understand to communicate about money. Words like: credit, interest, savings, investing, Roth IRA, 401(k), Stocks, Index Funds, debt, loans, mortgage, etc.
Tracking your expenses.
Knowing what to do with your next dollar.
Learning how to pay off debt.
Learning how to save.
Learning how to invest.
Learning how to negotiate your bills.
Learning to increase your income
The list goes on and on.
However; at the base of our finances, one skill touches every other part of our financial life. When not improved or even worse ignored, it causes us to feel stuck in our finances. This is the Skill of SPENDING.
The skill of spending is extremely under-discussed in the personal finance world or if discussed only half of the skill is ever mentioned. I am very guilty of this as well. There are two parts to the skill of Spending:
Choosing not to spend. Which includes things like:
understanding delayed gratification
negotiating bills
using sales to get cheaper items (not just an excuse to shop)
cutting items out of your budget
ignoring the masses (social media/friends)
saying NO!
Spending for value, joy, and fulfillment.
SAYING HELL YES!
If you are like me, you entered the personal finance world by learning how not to spend. Because like me you put yourself in a bad position financially and you were looking for a way out. And at the time the only way out was to learn how to cut things out of your life and make the most of the things I already had. In this phase of life, your favorite word is FREE!
Like me, this skill has served you very well over the years. We have built up the ability to say NO. You can ignore the noise. We can see all the trap doors that are being offered to us regularly. We have been able to build up savings, investments, etc. On the surface everything looks great, the numbers all look good. We know we are in a great place, especially when we remember where we are coming from.
However; there just seems to be something lacking. Whenever you think about your finances, you feel a level of discomfort. You have a desire to do certain things but you keep putting it off because you have honed the skill of delayed gratification. So you can put it off forever always chasing some fictional finish line of when you will finally "feel" financially safe. But you know in your heart of hearts that day will never come. No matter the amount of money you amass, it will never feel enough.
Why? Because we never learned the skill of saying YES to the things that we LOVE. Saying YES to the things that bring us JOY. Saying YES to the things that are fulfilling. As Ramit Sethi says, "It’s a tragedy to live a smaller life than you have to."
Here is a scenario of how this can play out:
There is a conference that you have always wanted to go for but you never had the financial flexibility to do. However; now you do and your favorite writer will be speaking at the conference. He will also be hosting a small session to talk with a number of his fans. You talk about the opportunity to meet this writer because of how influential his work has been to your life. However, you choose not to go for the conference because you look at the cost. You see the ticket of the conference that is $150. Travel and lodging another $400. Meals for the period $300. You decide spending close to $1000 is too much.
After not going for the conference, you feel a ton of regret, seeing clips of the topics spoken about. You hear from friends who went to the conference about the different discussions they had and see the joy in their faces. You hear about the writer spending an entire night with his fans and buying dinner for everyone. Your regret grows. Your pile of money grows but your life satisfaction shrinks.
On the other hand, we have those of us who have learned how to say YES to ALL THE THINGS. Limitations do not exist to those of us in this category. If there is something we want, we get it. If there is an event that we believe we will enjoy, we go for it. If our friends are celebrating something, we are there. The word NO does not exist in our vocabulary. We tell ourselves things like:
"Well, I only live once and I could die tomorrow so might as well live."
"I will figure out the details later, but for right now I have to enjoy."
“Money is to be spent. I can’t take it to the grave with me.”
“It is an intimate and special time. I have to be there. They need my support.”
“I deserve it, I work too hard.”
Especially for anything that has to do with our friends or family. The guilt and shame we feel overshadows every other possible option. Then add on the expectation of what we believe our life should look like (because Instagram). So we conflate fancy with fulfilment. We confuse joy with expensive. We spend not based on our unique interests but rather based on what society, family, friends, coworkers, and username213 on Instagram tell us we should spend.
Here is a scenario of how this plays out:
Every month you spend about $200-$300 celebrating your friends by going to brunches or drinks or dinners. As much as you enjoy spending the time with your friends, you would love to travel to different places and experience different cultures. Currently, the only time you travel is when your friends are celebrating some special event and you have an inability to say NO. This gives you no flexibility in your finances to travel how you want. You also bought into the hype of buying a house (or moving to a fancy apartment), a new car, an entire new closet of clothes and shoes because you are an adult, you have a “good-paying job” and this is a sign of success.
SO day after day, you wake up and life feels a bit panicky. You feel on knives' edge at all times because to fund the lifestyle you have taken on an ever increasing amount of debt. Life feels a bit disappointing, like there is so much more but it feels completely unachievable.
Regardless of which scenario feels closer to home, you can see the problem with not fully developing the Skill of Spending. This skill has to be worked on to be great with handling money. Otherwise, we either have a Scarcity Mindset or never make progress toward our financial goals. Embrace your unique interests and make unconventional choices with your money.
As Ramit Sethi says the goal when it comes to our finances is
Ask yourself this question: What would life look like if you
Thanks for reading.
Remember Generosity>greed.
God Bless you
✌🏾
Recommended Reads
Kyla Scanlon Review of the Weird Economic Year that was 2023 and her outlook of things that might shape 2024.
Morgan Housel on Passive vs Active Learning. The benefits and shortcomings of both learning styles but the importance of using both for your benefit.
Nick Maggiulli on Your Money or Your Life. He talks about how money permeates every single aspect of life.
Ramit Sethi on Rick Life Traps. It is not what you think it is and I loved reading it.