Written by: Corey Janoff
Back in June 2019, I wrote down a tweet by Carl Richards that resonated with me. I saved it in my blog folder and haven’t done anything with it until now. The tweet said (not sure if I’m quoting or paraphrasing because I didn’t save the link):
“Pretend you died and someone had to tell your life story through your spending history. What story would it tell?”
Think about that for a moment. What would your story be?
Mine would probably be pretty boring – and I like it that way. People would look at me as a homebody who doesn’t go out a lot. Pre-pandemic, the occasional outing would consist of a round of golf or a concert/comedy show/sporting event every once in a while. Maybe a happy hour here and there after work.
You would point to my wine and liquor purchases and say I never buy the most expensive item but typically avoid the cheap stuff too. Often things he buys are purchased on sale.
Recently he seems to really be into drinking teas of all varieties—Green, black, oolong, herbal, all flavors & styles welcome.
The guy prefers cooking at home over eating out.
Almost all of his shopping is done exclusively at Amazon, Target, and Costco. He must have kids because there is many kid stuff in the shopping cart and purchase history.
Not sure what he wears, because he never buys clothes. Occasionally some new socks and underwear. I still have t-shirts from high school that I wear – my wife is embarrassed to be seen in public with me. If I need something new, I put it on the birthday/holiday list for relatives to buy for me 😊.
He’s a saver. At least 20% of his income every year goes towards retirement. Puts a good amount away for his kids’ college too.
What Are Your Values?
Our country’s fearless leader, Joe Biden, has been credited with the quote, “Don’t tell me what you value. Show me your budget, and I’ll tell you what you value.”
I believe he said it back when he was still a senator. He credited his dad with instilling the message in his head.
It’s so true. Actions speak louder than words. We’ve all heard that one before—basically the same thing. Don’t tell me you love me – show me.
There’s no judgment here. I don’t really care what your values are. You do you. If you value something, make sure you prioritize it and literally put your money where your mouth is.
If you say traveling is important to you, make sure you actually travel! Don’t wait until you get to retirement to take a trip abroad (once it’s safe to do so again). Is spending time with family and friends, mostly outdoors, important to you? Why aren’t you doing more of it?
If you are charitably inclined, make sure you’re giving money to charity or volunteering your time!
If you say paying for your kids to go to college is a top priority, you better make sure you are saving enough to pay for their college. That may mean buying less house than you can afford so you can put more away for college.
What are you spending money on that is not important to you and your values? Is there a way to cut that out?
Do a Spending Analysis
I don’t like budgeting. Budgeting is boring. It’s not fun. Budgets are like New Year’s resolutions: they’re nice in theory, but people don’t stick to them for very long. They work for some people, and if they work for you, then great. Keep on budgeting.
I am, however, a proponent of occasionally doing a spending analysis to see where money is going. Simply having an awareness of your spending habits is powerful and eye-opening in some cases. Get a pizza, open a bottle of wine, sit down with your significant other for a fun spending analysis date night.
I recall a meeting with someone a handful of years ago where we were trying to drill down and figure out why there wasn’t more money available to save and invest for their goals. “We live modestly and don’t spend that much money.”
We went through some of the major line items to estimate what they thought they spent on groceries, utilities, dining out, travel, etc. I think they estimated they spent about $8-10k/year on travel.
“We usually take a couple of vacations a year, one international.”
I asked them to export their bank account and credit card statements over the last year into a spreadsheet and categorize all the expenses to see how much they actually spent on various things. Do a spending analysis.
It turns out they spent about $30,000 on travel the prior year! That explains about $20,000 of the gap between what they thought they spent and what they actually spent.
Again, I don’t care that they spent $30k on travel. My job is to help people achieve their financial goals, whatever those may be. Sometimes goals conflict with each other. It’s challenging to spend $30k/year on travel and save aggressively so you can retire early and pay for 100% of college for your kids. Something has to give.
How to Not Spend So Much Money
I’m not anti-spending. Spending is good. It keeps the economy going. Businesses need you to spend money. Some of you may not be overspending at all! But are you spending money the right way for your goals and values?
It’s difficult to make changes after you have become accustomed to a certain lifestyle. It’s easier to buy less house in the first place than to downsize once you are in the nice house.
My best advice is to prioritize your goals first. Make sure you are putting enough away for retirement, college student loans, etc., before spending your money on lifestyle expenses. If you are putting enough money towards your various financial goals, go nuts with the rest of it and spend on whatever you want!
Create a Spend Management Strategy
Having a plan in place, written down, can help you achieve your goals. While I’m not a fan of budgeting, as mentioned, it doesn’t hurt to put a spend management strategy together to help ensure you are spending your money in line with your values.
It’s helpful to prioritize the important stuff first. Spend money on your goals and values (or save money for future goals). From there, you will naturally be forced to spend less on the stuff that isn’t as important.
We all learned over the past year we can do without travel, concerts, live sporting events, expensive dinners out, etc. We would all like to participate in those activities again and hopefully will be able to here soon, but it’s feasible to quit cold turkey and still be happy.
You can find other activities to do that are much less expensive and just as enjoyable. Many people have discovered the joys of hiking, camping, fishing, golf, tennis, birdwatching, board games, and simply spending time with loved ones. While some of those activities can get expensive if you allow them to (country club memberships), you can just as easily buy a used tennis racket from Goodwill and head to the tennis court at the local park with a friend once a week.
If you prioritize your goals and values first with your spend management strategy, you can let everything else fall into place after that.