How Spending Too Little Money Can Cause Unhappiness

I’ll be the first person to tell you that you should save money. If we go shopping together, I’ll probably try to talk you out of buying a few items with phrases such as “Yeah but do you REALLY need it?” or “Don’t you already have a pair of black winter boots?”

I do this in pretty much every aspect of my life. Growing up with a scarcity mindset has caused much of this. You know, the whole idea that there just isn’t enough to go around.

It wasn’t really anyone’s fault—a lot of people think like this. Myself definitely included.

But lately, I’ve been trying to quit. You know why? Because it doesn’t make me happy. Sometimes, opting to spend less is the wrong choice.

Some examples:

The Opportunity Cost Outweighs the Minor Expenditure

You spend 45 minutes debating on whether or not you should buy a $1 headband. Poor decision.

I literally did this a few weeks ago. My rationale was that I didn’t want to waste something if I wasn’t really going to use it, and I also couldn’t decide on a color. For all the time I wasted standing inside of Forever 21, I could have just bought a couple of them and gone and earned back that money somewhere else—my time is worth much more than $1/45mins!

You End Up Buying Really Crappy Things

Poor quality items and services will eventually eat up your time and cause you more hassle in the long run.

In the race to save a buck, it can get awfully easy to skimp on quality. Just buy that lamp that costs $10 less, and the cheap plastic might melt on you after about a year of use. Worth it? Probably not if you have to buy a new lamp every year.

You waste money and resources in the long term because you don’t just lose the lamp—you also lose the time it takes to dispose of the old one and go buy a new one.

You Don’t Buy the Things You Truly Want

Of course, I’m all for saving money when you’ll be just as happy taking part in a free event versus a paid event, or using a cotton t-shirt for a casual gym workout instead of buying the newest Nike shirt with sweat-wicking technology (because I prefer the feel of cotton while working out, and that’s fine by me).

Sometimes I’m most comfortable using things I feel like I can’t break or ruin. (That’s part of the reason why I got a used car with a couple of scratches and dents already on the thing—so there’d be less of a flinch factor as I’m driving my car.)

When spending money pays off substantially

I used to throw money into my interests like website creation—I bought my domain name, and hosting for my personal website (this one). At the time, I was a student without a regular income, so it was hard to front the money.

This simple experience of being able to play around with a website and all of the nuances that go along with setting one up has paid huge dividends in my professional life. I’ve been hired in freelance capacities to help small businesses work on their websites, and it’s been an asset in my day job where I can manipulate HTML and CSS to update our marketing materials as needed.

Essentially, I’ve made my initial investment back…and many times over.

Another way I’ve spent money and have seen an even larger return on investment is through purchasing books—I’ve made a rule for myself that if I have interest in a book and it’s available for Kindle, I will allow myself to buy it without thought if it’s under $20. This is a heuristic that has paid off for me because I spend little to no time debating with myself about whether or not it’s worth it (therefore not losing the opportunity cost of my time).

I expect that the most I would ever spend on books in any given year is about $500 max. That’s a very small investment given the insights I’ve gotten by reading them. I read several personal finance books one year and that has led me to be extremely automated in the way I handle my finances, allowing me to save, invest, and spend pretty much guilt-free.

The key for me is to identify what I believe to be good investments (hint: these usually involve learning or paying to experience a process) so that I’m not wasting my time trying to decide whether it’s right for me.

Secondly, I sometimes need to force myself to spend the money when my logical mind is telling me it’s a good idea. Emotionally, sometimes I’m too conflicted.

So there’s today’s lesson. Spend more money on yourself. The likelihood of it paying off (as long as you have reasonably good judgment) is huge.


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