How do you make spending decisions?

or, “in which I let my privilege hang out” - so, if that kinda thing bugs you, you’ve been forewarned

How the hell do y’all make money decisions? (Where here “y’all” means “most of my friends and family who do have some disposable income”) Like, “friend invited me to dinner at expensive place; should I go?”

Ok, so you make the easy decisions. You switch from AT&T to Fi so your phone bill is $45, not $95. You cancel the gym you never go to, and you share your Netflix account with family or friends. Cool. And then, if you’re on a tight budget you might say “my budget for restaurants is $x this month and I literally never go over it.” Fine. Or, if you’re super rich, you might say “sure, I don’t even think about it.” What if you’re in between? If you’ve got money to spend, but you’re trying to save, and you don’t know whether this restaurant is worth it?

In practice, I usually act on the “super rich” side, but that feels unsatisfying. It works - my friends and salary are such that it’s never been a problem, and our expenses are below our income - but am I hedonic-treadmilling? How would I know?

I’ve been trying to do something about this, to at least semi regularly do a little bit of a review, so last year I downloaded all Tati and my transactions from Mint, and tried to categorize them as well as possible, and… well… had no idea what to do. I noticed we spent more than I expected on airfare, but, I mean, what are we going to do there? Not gonna stop flying home for the holidays. We spent more than I expected on uber/lyft, so we both said “huh, I guess let’s try to stop taking uber/lyft so much.” We spent $x on food, which… I dunno, I guess it’s fine? I already cook a decent amount, and certainly I would probably feel like I’m missing out on relationships or experiences or something if I canceled more things because of money (penny-wise, pound-foolish; or scroogey).

But man, we’re hedonic treadmilling so hard! My expenses (even just mine, not counting Tati’s) are such that if I were an artist or a not-particularly-affluent-nonprofit worker, or something, I don’t know how I’d make ends meet! (Yes ok, it’s SF, but even our obnoxious rent is still only like 40% of our expenses.)

One thing I’ve found we can do is to look at particular things, quantify the money spent on those, and think if there’s a way to reduce them. But that feels like stabbing fish instead of using a big net - we might make a few targeted changes but it’s pretty unsystematic.

So, I don’t know, if you have a principled way of thinking about spending, I’m curious to know.


Daniel -

About the same, honestly – we gather up all the data and look at it, and then if there’s something that looks “obviously wrong” we try to fix it. Usually there’s nothing obviously wrong.

One thing that’s been working OK for us: simulate a tighter budget by automatically moving a big chunk of income into savings every paycheck, where the amount is determined by our saving goal. I find it a bit easier to say “save more, then figure out how to spend less to deal w/ it” than “decide in a bunch of cases whether spending is worthwhile.” This might be worth a try?

Anyway, at a high level, I do feel like we had a similar experience with budgeting – looked at expenditures, made some obvious moves, then said “nothing here clearly left to optimize,” then left things where they were. (It did make me less anxious about signing up for a couple $5/mo TV or music services or buying a few albums, because those turned out to be a tiiiiny slice of our spending.)

(If you’re hitting your saving goals / donation goals, maybe treadmilling after that is not too bad, especially if what you’re buying is something you endorse in retrospect (e.g. experiences w/ friends and family, or possessions that continue to bring you enjoyment) instead of things you don’t endorse in retrospect?)

Dan -

oh my god this is impossible

mint doesn’t actually slurp all the transactions, venmo has some, paypal has some, sometimes the connections don’t work, sometimes there’s checks, mint’s categories are just real bad

On the plus side, I’ve finally gotten to a set of categories that make sense for me, I think: Rent, Pittsburgh House, Discretionary Fun Around Town, Discretionary World-a-better-place, Discretionary Physical Stuff, Well-being, Smart bets, Family, Income tax, Daily life necessary evils (groceries, house stuff, phone, hair, transportation), Vacation. ~10 categories feels manageable, and having a category for each one means I can pretty well feel out how they should each go. Like, most purchases within “discretionary stuff” feel about the same; most purchases within “vacation” feel about the same; etc.

On the minus side, if someone said “one of you is going to try taking a more fulfilling job that pays less money”, say, or “you might want to move to a bigger apartment” (both of which are accurate) I have not a clue how to tell if that’s possible or not.

“Saving goals” (like, “I want to save $x” and then when you hit $x you don’t have to worry about it anymore) has always been hard for me - my saving goal is always just “as much as possible, duh!” I guess the real thing that’s going on is “as much as possible (without being miserly)”, and “miserly” just keeps shifting.

There’s a lot to do here and I’m tired! Thanks for being interested - I’ll have to talk with you in more detail sometime. (If you want.)

blog 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010