86: Am I Too Frugal? 6 Times It's Ok To Spend Money
After clipping one too many coupons, have you ever thought, "Am I too frugal?" There's a lot of talk about the importance of saving (and it is important), but it's also important to find joy in spending your money. Think: The gift that is enjoying donating to causes you care about, buying that thing that makes you feel tingly, or the excitement of spending a little more on a meal out plus a drink and dessert. In this episode and corresponding blog post, we'll cover the questions "Am I cheap? Is this financial anxiety? How can I stop worrying about money and spend intentionally?"
Am I Cheap? Am I Too Frugal?
There is a difference between being smart about money and being cheap. While it's difficult to quantify, it ultimately comes down to financial ability and how a person feels about their money. The saying that comes to mind that captures the difference between being smart with money and being cheap is "penny wise and pound foolish." The meaning behind this saying is being so frugal about money, that a person loses sight of the importance of living their life. Instead, they prioritize saving their money so much that they forget about the value of enjoying life and what saving their money can afford them. And not just afford things financially, but afford time with family, friends, and doing something they love.
With most things money-related, there is a huge asterisk here. You may be struggling financially and are having a hard time. And in that case, of course, your frugality is more about survival mode. So if you are in financial survival mode, be straightforward with people in your life about money. So I'd encourage you to be super precise with yourself and your friends. It sounds like this "going out to dinner isn't in the budget for me. Think we could do a neighborhood walk instead?"
Is This Financial Anxiety?
If you have anxiety about spending money, you aren't alone. Financial anxiety is a sense of feeling nervous, anxious, or on edge about your money that goes beyond reason. This is a tricky concept to nail down, but think about it the way you do traditional anxiety and apply financial concepts to it. In general, that means asking yourself if your money worries are bleeding into other areas of your life. For example, it's healthy anxiety to worry about saving enough for retirement. Still, after plugging your current contributions into a few calculators and checking on your current investments, you should feel less anxious about retirement and be able to stop worrying about it. If you think your money worries are seeping into other areas of your life, or your worries continue to be intense even after applying logic and reason, you may want to seek out emotionally-focused financial coaching or financial therapy.
How Can I Stop Worrying About Money?
For years, the dominant message in personal finance has been, "it's your fault if you are struggling with money!" In the personal finance industry, so many messages uphold the value of not having debt, saving money, and not spending on "frivolous" items. If you've bought into those messages, of course it makes it difficult to stop worrying about money. So I strongly encourage you to remove yourself from being subjected to messaging that makes you feel shame about money.
Here are two of my best tips for dealing with money worries.
PLAN. Give your money a plan. Make sure you have some of the pillars of personal finance in place to give your money and mind space to stop worrying about money. Make sure you know how much money is coming in, how much money is going out, and you have a handle on the ins and outs of your personal finances.
NARROW YOUR FOCUS. Don't have a million and one financial goals. Instead, choose 1-3 things money goals that are important to you for you to work on, and give yourself some wiggle room while you work toward achieving them.
For example, if you are working on topping off a 3-month emergency fund, you could either buckle down and put all of your energy toward it OR give yourself an extra $20 a month to spend for fun. By having a little wiggle room in the form of $20 a month, you'll still know that you are still working toward your 3-month emergency fund goal while not totally depriving yourself.
When Is It OK to Spend Money?
If you have a budget or spending plan in place, it is ok to spend your money. There are several ways to spend money so that you can test out to see which works best for you. Here are six of my best tips on knowing when it's ok to spend money.
FUN MONEY. Having cash at the start of the month that you can spend unrestricted can help you feel like you can "splurge" and safely spend a certain amount of money. This can be especially helpful in relationships where most money is shared. Each partner has their own money, and autonomy can be incredibly helpful in staving off some of the most common financial disagreements.
SPEND WHAT YOU'VE SAVED FOR. When you've diligently set aside money for a specific thing, go ahead and spend it! For example, if you've saved up for a vacation, spend that money on that vacation. If you'd saved $100 more than you needed for food, accommodation, and travel, you could safely spend the extra $100 on souvenirs, or adding on another excursion, or ordering room service! Guilt-free!
GET USED TO MISTAKES Remind yourself that mistakes are a part of the journey. In my book, The Financial Anxiety Solution, I have an entire chapter dedicated to making mistakes. Mistakes are normal; they make you human. When you make a spending mistake, acknowledge it, view why the mistake happened with compassion and curiosity, and move on.
GET ALIGNED. Spend more on what makes you happy and aligns with your values. If you love vintage jewelry, enjoy the process of hunting down a beautiful 1930's broch on a Sunday afternoon, and happily buy it when you find it! Research shows that spending on things you love, not just experiences as often is stereotyped, can provide a good return-on-happiness-investment.
REFRAME Reframe your thoughts into something that makes you feel good when you spend:
f you are getting comfortable with saving up for something and purchasing it, try something like, "I'm able to buy this," "I can afford my purchase."
If you've struggled with feeling safe spending money or feel guilty about spending money, you might try, "I know I can spend on this item, and not overspend." Or "it's safe for me to spend this amount of money."
REWARD YOURSELF If you can use credit in a way that doesn't harm you, consider cash-back or rewards cards. I love using points- and miles-earning credit cards to offset the cost of travel simply by putting my everyday purchases on a credit card.
Spending Intentionally
It's normal to have fears about spending money, especially given the noise in personal finance education that shames people for spending. By spending intentionally, you can learn how to enjoy spending money on the things that bring you joy. As I've shared today, it can be important to assess if it's normal worries about spending money or if it's something more serious like financial anxiety. Giving yourself a saving and spending plan can make it easier to feel confident about safely spending money. Finally, try out a few different ways to spend your money and see which method feels best for you.
If you are in need of more guidance on spending intentionally, my step-by-step workbook, The Financial Anxiety Solution, can help you stop worrying about money, take control of your finances, and live a shame-free life!
The Financial Anxiety Solution is available via Amazon or your retailer of choice! Available in both digital and paperback format.
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It feels so good to be back on the podcast game. If you were here. Over the past few weeks, I took some time away from my podcast, I took some time away from Instagram, and I took some time away from my inbox. So I could really just reset my nervous system. And I'm really excited to be here today with a podcast about frugality and cheapness and what it means to spend intentionally, because if you're listening to this in real time, we're about two weeks into a new year, which usually comes along with a lot of personal finance noise about setting a new year's resolution to spend less or to do a no-spend month or to join a Don't Buy Anything Facebook group, whatever those things are called. But if you know me, I think it's important to talk about like all sides of this, and today, we're going to take a hard turn--a 180, and we're going to talk about the beauty of spending money, the gift that is enjoying donating to a cause you care about, buying the thing that makes you feel warm and tingly inside, the excitement of spending a little bit more on a meal out, plus a drink and dessert. So in today's episode, we'll cover the questions. Am I cheap? Is this financial anxiety? How can I stop worrying about money and spend intentionally?
There is a difference between being smart about money and being cheap. It is the saying that I think really comes down to a person who is pennywise and pound foolish. I'm going to start today's episode with a little story (that is real) that many of you might not have heard about. But it really illustrates this idea of being pennywise and pound foolish or being so worried about money, that you really slide into being cheap, and not being able to enjoy the parts of your life that could be enhanced by just spending a little bit of money. So let's go back in time, like way, way back to the 1830s and 50s, when a woman named Hetty Green was born. Hetty Green was born in 1834 to a very wealthy wailing family. She was interested in money and she had this advantage of having a father who taught her about money and kind of included her in family bookkeeping and personal finances, and you know some things that really weren't offered to women at that time. And by the age of 13, she was kind of taking over the family bookkeeping, so she'd always had this interest in money, she had the privilege of heavily having access to financial records and tactics and hold on to your seats, she inherited $101 billion (with a B). Actually, at the time that she inherited the money, it was $6 million. But when you adjust it for inflation, and bring it up to 2020 standards, it would be $101 billion. So she is an incredibly wealthy woman with all of this access to financial tactics, and was known for being so cheap, she would literally wear her clothes until they became rags. She would instruct the people who cleaned her clothes to only scrub the hems of her dresses to save money on soap as to not launder the entire garment. There are rumors that she spent a night searching in her carriage for a stamp worth two cents. And she reportedly would travel hundreds or thousands of miles to collect on invoices that were owed. And the most outrageous story in my opinion was that of her son. She had a son and when he was young, he broke his leg. And Hetty was so fearful of spending money and saving money and doing the right thing with her money that even though she could afford access to quality health care, she refused to pay for it and instead had him wait in line at a free clinic. And that wait in line meant that the leg didn't have time or wasn't able to heal properly, and her son's leg eventually developed gangrene and his leg ended up having to be amputated. Because even though she could afford medical care, she refused to pay for it and instead had her son's leg amputated because of gangrene. No, look, none of us listenings are billionaires I just--statistically thinking we aren't. But this is an extreme example of a person who really pushed it to the edge of being so fearful of spending money. And in today's terms, you know, you and I are not Hetty Green, but I want to really drive home that being cheap, is not cool. In today's terms, it's really like--let me give you some more real world examples, because I don't think we are Hetty Green here. And real world examples being cheap is like the person you go to dinner with who orders water and an appetizer, but then like, takes bites from everybody else's desserts, and then takes home a baggie of everybody else's food. It's the person who books a hotel, that's a 30 minute drive away from the town's main area or attractions, to save some money on overnight stays, but then ends up paying more in time and energy to drive to and from town.
So look, I can't answer this question for you of Am I cheap? but I would invite you to think about your relationship with saving money. And not just long term saving, like saving for retirement or creating an emergency fund. But whether you are saving money, and some of the ways I mentioned earlier that are only really harming you in the long run. So some of you might be screaming into your headphones right now saying things like, Lindsay, I actually can't afford to eat out or to travel. And in that case, I want you to be really straightforward with yourself and with your friends. And it might sound like saying to your friends as uncomfortable as this is, Look, going out to dinner right now isn't in the budget for me, do you think we could do a neighborhood walk instead? I know, having been the person where at times I'm not able to afford certain things or being the friend who is pushing for certain things. It's so much more relaxing, just to have somebody say, Hey, that's not in the budget for me, I'm not able to afford that, is so much more relaxing than having them be all squirrely and shady about why they won't meet up with you or why they keep saying no to invitations, so much better just to say, Hey, I can't do that right now, but I still would love to see you. What could we do instead? And there are so many affordable ways to spend time with family and friends that don't involve spending money or definitely ways to spend less money. That is definitely doable. So if that's you and you're like, Look, I actually can't afford to do some of the things you mentioned. That's fine. Just be straightforward with your friends. So are you--kind of run yourself through like the Hetty Green lens and be like, Look, am I letting my son's like get amputated to save $1? And do with that what you will. So that's about or on cheapness or frugality. Like, it's great to save a few bucks. But it's also not healthy literally to be pinching your pennies so much that it impacts your relationship with others.
So let's talk about whether or not frugality might be a symptom of financial anxiety. As you know, I wrote a book called The Financial Anxiety Solution, so I love talking about financial anxiety. But just to recap, if you're new here, or if it's been a while since you've been around the concept of financial anxiety, financial anxiety is a sense of feeling nervous or anxious or on edge about your money that goes beyond being reasonable. Like many concepts in the field of mental health and in money, it can be a tricky concept to nail down. So you have to decide whether or not your anxiety is reasonable, or whether it is getting in the way. And in general, we therapists (which is what I am if you're new here) when we're deciding on whether or not something is problematic, it's about whether or not that emotion is making it difficult for a person to live their life in a way that feels good for them. In other words, is the financial anxiety that you're experiencing the nervousness, the anxiousness, the being on edge piece of you about money, getting in the way of you living your life? Are you worried about money from the time you wake up from the time you go to sleep? Do you feel like no matter how many times you check your bank account, you can't stop checking? Do you feel like you are stuck in this trap of perfectionism and you want to get the best high yield savings account and you want to invest in the best index fund or you want to maximize your, you know, checking account? I don't know whatever it is, but do you feel like it is kind of bleeding over pther areas of your life, or if after you address those parts of your worry, you're still worried about them, then it might be financial anxiety. But if it is time bound or time limited, meaning you're only anxious when you look at your retirement fund, but once you look at it and see that you are on track, or that the funds that you've chosen actually align with your needs and your goals, then that anxiety goes down, then you're in good shape.
So let's talk a little bit about why financial anxiety and cheapness and frugality gets to be really, really difficult. Because the dominant message in personal finance has almost always been about finger pointing and finger wagging. As in, it's your fault if you're struggling with money, you're the problem if you don't have enough, and when that is the dominant message, it's bound to make you feel like shit if you spend money, right? Because if the noise is: don't spend money, don't get avocado toast, don't get lattes, don't go on vacation, don't see the inside of a restaurant, etc, etc. Then, of course, even if you have saved up money, and it is literally safe for you to spend that money, it is really hard to untangle yourself from the message of it's bad to spend money. So my invitation for you if you are feeling really guilty about spending money is to eliminate the noise that is making you feel shameful or guilty or bad about money. At the intro of today's podcast episode I shared that we are in, you know, a calendar flip--it is January of 2022 at the time of this recording. And New Year's is usually a time where we're doing a ton of resolutions, or at least that's the dominant noise at this time of year. So instead of joining all these no spend groups, maybe a resolution or a goal could be to remove yourself from spaces where you feel bad about money, or where you actually don't want to not spend any dollars ever. So if you are consuming personal finance content that is full of finger wagging and shame, maybe a good thing to do would be to just mute those people on Twitter or unsubscribe from their newsletters. And that also includes me, you know, I include myself in that knowing very well that my message and my approach is not for everybody. And if at any point in time my message is making you feel like shit, then by all means, please unsubscribe from this podcast and stop following me on Instagram. So if you are experiencing financial anxiety and financial shame, I want you to just kind of see whether or not is time limited whether or not it's bleeding into other aspects of your life and whether or not removing yourself from some of the shame laden spaces can help.
So if you're feeling like, Okay, I'm ready for the next step; what do I do? The next question really is: Okay, great, but how do I stop worrying about money? So but at this point in time, I've kind of nailed on this idea of cheapness or frugality that can be negatively impactful. So how can you actually stop worrying about money? In my opinion, and my experience in my work, when your money has a plan, when you have adhered to your version of personal finance pillars, and you have a place to give your money a job and to give your mind space to stop worrying about money, that's when that anxiety around money can go down. Meaning: Do you have a spending plan in place? Do you have an emergency fund? Do you have short term goals? Are you working on investing in your future, whether that's through a retirement plan, whether that is through life insurance? You know, I've talked about these things before, but when you know how much money is coming in, how much money is going out and knowing that the money that is going out is contributing to your well being. That is when some of that anxiety tends to go down. And again, this is the time of year where there's a lot of noise about link setting and chasing a bunch of goals, I find that the fewer goals you have, the better. I like to choose between one and three financial goals that I'm working on at a time and I encourage my clients to do the same. And continue to just check in with those one, two, or three goals. That gives you the space to not be splitting yourself into a million little pieces and trying to chase all of these goals but really gives you this intentionality to work toward a couple of goals that are really important to you. So for example, if you're working on topping off a three month emergency fund, you could either buckle down and put all of your energy toward that emergency fund, or give yourself a little bit of wiggle room, that might look like an extra 20 bucks a week or 20 bucks a month, that you use to just spend for fun things knowing that you're still working toward your three month emergency fund goal. I find that when we give ourselves a bit of space, we're more likely to achieve that financial goal than when you're like, No, I'm not doing anything fun, ever until I achieve my emergency fund goal. That is where we tend to get into this black and white thinking and this all or nothing thinking that, quite honestly just doesn't work for most people. So how to stop worrying about money can be about finding a couple of goals that you're working toward, and finding that there's hopefully a little bit of leftovers. And when you have a little bit of leftovers, that is when you can spend for fun. And for me, I build in fun money every single month.
So now we're getting into like, okay, you've got a plan in place, how can I tell myself, it's okay to spend money? So I'm going to share what works for me and some things that I've seen work for my clients just to give you an array of different things that you can test out and try and see if they feel good for you. So I mentioned that my partner and I have what I call "fun money." In the olden days breed pandemic, we had literally go to the ATM (and by we I mean me because this was like my nerdiness and excitement) but it works for us, I would literally go to the ATM, withdraw cash and give each of us cash that we could spend however we wanted, without judgment or having to run it past the other person. This worked really well for us. I said worked because now it's digital, which I'll get into in a second, but this works really, really well for us. Because even though we are in alignment on our long term goals and making sure that our budget is working for us, or our spending plan, as you know, I like to call it is working for us, it still is important for us to have a bit of autonomy over just the little fun purchases that like maybe I don't want to run by them or maybe they don't want to have to text me and say Lindsay, Can I buy this thing? Like neither of us wants to be the other person's like bank account or parent. So this works really well for us. And as I've shared on this podcast before, for me, sometimes that means saving up my fun money for a couple of months, and then doing a spa day or a couple of years ago saving up my money for a couple of months and going to get a beautiful piece in the form of a tattoo on my upper arm. Right? Those are things that felt really good for me to save up on. And for me to spend towards whereas my partner and making this up, but like maybe they prefer to go spend money on car parts are on tennis shoes that like are just like not super necessary, right? Like they're not for day to day they're for like they look cool and fun and whatever. So that is fun money and I mentioned earlier that we used to do it literally in cash. But now we do it using YNAB, you need a budget and you can kind of do digital envelopes there. So when we're doing our spending or fun money spending, we stuff each of those digital envelopes at the beginning of the month and then we are able to spend or save those those digital envelopes worth of money in a way that feels good for us. So that is how I like to spend my money and makes me feel really good and really fun. But here are some other ways that you might want to try out if you are struggling with spending money. So you're marking what your spending is for can be really, really fun. So this is saving up money for say a vacation and spending the money that you have earmarked for that vacation on that vacation. Sounds pretty straightforward, but I want to like really get clear on what this means. So let's say you took you've saved up money for a trip. And after you kind of had your food and accommodation and travel all accounted for, you realize like, Oh, I saved an extra $100 more than I actually needed for this trip. I would encourage you to spend that extra $100 whether it's on souvenirs, another excursion, ordering room service, whatever it is guilt free, because you have worked really consistently on saving up for that vacation. So spend that money on that fricking vacation. So take the same concept toward whatever it is that you are saving on. Maybe you are saving up for I'm looking out my window and it's freezing outside and the snow is coming down. So maybe you're saving up for a nice new winter coat and that winter coat goes on sale. And you had saved up a lot of money for that coat. Go ahead and buy yourself like the cute hat or mittens that go along with it, you know you are allowed to spend. I mentioned earlier that I used to have a literal cash envelope just for fun money. But I think that can be fun for you whether you're partnered or not to say look, I have this money in a literal cash envelope in my literal wallet, whatever that means and if I see something that I like or want, or I'm curious about and I have the money for it, spend. It's okay to spend other things that can help with spending money as you're kind of tipping away from feeling like you're holding on too tightly to your money can be spending more on what makes you happy, and is in alignment with your values. This might mean donating really generously to a cause that feels good to you. If that makes you feel really happy. It might be walking by that beautiful boutique and seeing this shiny, sparkly, you know, nose ring that you are eyeing and being able to buy it right that might make you really happy and is in alignment with your values of supporting community based businesses and artists ends. So that can also feel really good. The other thing that can be helpful is reframing your thoughts into something that makes you feel good when you spend so often just saying something like, I'm able to buy this organic food, or I can afford this beautiful cashmere scarf; that can really help.
If you struggle with being fearful of not being able to stop spending that's a common fear in my work. It's: If I start spending, I won't be able to stop or if I start allowing myself to spend money, it'll get out of control. Try this little reframe. I know I can spend on this item, and enjoy it and not overspend, or it's safe for me to spend this amount of money, or I'm working on trusting that I can spend and it won't harm me in the long run. And then the last thing I'll say is that mistakes happen. They are normal, that is a part of being a human. So if you do quote unquote overspend, then that's okay, just figure out a way to tweak in the next month or three depending on how much you overspent and and don't beat yourself up for it. I know, it's really easy for me to say. But again, in my book, the financial anxiety solution, I have an entire chapter dedicated to getting comfy making mistakes. So check that out. If you are struggling with the spending piece, and trying to do it the right way that might be an option for you to practice some of those exercises that I outline in the book. Oh, and the last thing I'll say actually, as a way to spend money that feels good is for me. If you can use credit cards in a way that doesn't harm you, meaning they don't land you in debt, you are able to pay them off month over month without having to pay interest. Consider making sure that your credit card gives you cashback or rewards points or miles. That can be a fun way to kind of amp up the excitement. If you're working on feeling good about spending in a way that feels really good. So you might spend 100 bucks and get $1 to $5 cashback off of your bill. Or you might spend $500 and get some frequent flyer miles that can help to offset the cost of travel. So that can be another way to kind of amp up the excitement over safely spending your money.
So to summarize, it's normal to have fears about spending money given the way that personal finance industrial complex is drilled into us that it's all our fault that we overspend. Get really comfy advocating for yourself with your friends if you really are in a position where you cannot spend a certain amount of money and run yourself through that heavy green question which is am I cutting off my son's leg to save $1? Right? Ask yourself, Is this normal financial worries or is this financial anxiety that's bleeding into other aspects of my life? If so, seek out emotionally focused financial coaching or financial therapy from somebody who knows what they're doing, when you give yourself a saving and a spending plan, it often makes it easier to spend your money intentionally. And the last thing to summarize is to try out a few different ways to spend money and see what method feels best for you because every single person is different. These are just a few options that have worked for me and have worked for my clients. So give them a try, see what happens. See what feels good. And I would love to hear how it goes for you send me, literally like DM me on Instagram @MindMoneyBalance and say, Lindsay, I took myself out to lunch, it felt so good or you know, Lindsay, I actually spent the money that I saved up for my new furniture; I actually went and bought myself that the new end tables and comfy chair. Like let me know if you're spending and if it's feeling good, or if you're working on it feeling less bad.
And before I go today, I want to remind you that if you're listening to this in real time, I'm about to open up enrollment for my fifth cohort of my small group coaching program for service based small business owners that can be therapists, psychiatrist, dietitians, Reiki healers, acupuncturist, anybody who is in that space. If that is you, and you're working on building a sustainable practice where you can rewrite your relationship with money, set a sustainable fee that supports your lifestyle and work on the foundations of marketing that doesn't make you want to throw up, I would invite you to check it out at MindMoneyBalance.com/ProfitablePractice. If you're listening to this in real time, you can get access to the waitlist. Joining the waitlist for grow a profitable practice from the inside out does not obligate you to apply or join. But it gives you first access to the application which is huge because I kept the group at 12 people. It gives you access to a discount and an extended markup free payment plan. So if you are curious about that, you can read all about it at MindMoneyBalance.com/ProfitablePractice. At the top of that webpage, there's also an audio version of it if you would rather listen to what the group is all about and what it includes. But if you go now you can add yourself to the waitlist and get access again to first dibs to the application, a discount and an extended payment plan. I'm so glad you're here and thank you for listening and welcoming me back this January of 2022. I will see you next week.
Transcribed by https://otter.ai