With 2022 ending soon, it is a natural time to reflect on your spending habits over the last year to gain a better understanding about your relationship with money. Grasping your money values and spending habits is an important first step towards creating spending habits that match your values and prioritize the parts of life that provide you the most joy. Consider these questions for yourself to gain insights into your own spending. This can also be a fun outline to guide a money date with your significant other, if you are a truly nerdy couple like us!
1. What was the worst purchase you made this year?
It happens to everyone: You bought something and it did not have the positive effect you expected. Sometimes these are impulsive purchases, and sometimes we just hold unrealistic expectations about how a purchase will impact us. Think about what purchase or purchases jump out as being a complete waste of money so you can prevent them in the future.
2. Are you happy with your spending on ____________?
Okay, this question is multiple questions, but it is one of the most important. Here are some categories to insert into that blank:
Rent/Mortgage/Housing Situation
Food
Transportation, whether by car (including gas, insurance, maintenance) or otherwise
Your health and fitness
Clothing
Incidentals
Your phone, Internet, and other technology
Travel
Fun adventures
Others (friends, charity, etc.)
3. Are you happy with your spending at ____________? Do you know how much you spent there?
Rules for this question: Insert the name of the store or website where you spend the most. We are looking at you, Amazon, Target, and Costco shoppers.
4. How much joy do you receive from each of your subscriptions?
This is not to give you guilt about your subscriptions! The amount of joy we receive from watching our baseball teams on MLB.TV is incalculable. However, in recent years subscriptions have increased exponentially for many households. Really take the time to consider whether you receive value from each subscription. If you have a lot of subscriptions, list them all out, and decide which one(s) provide the least joy or are used the least. It will make you feel lighter and simplify your spending.
5. How much debt do you have relative to the beginning of the year, and are you happy with your progress in paying debt down or the decision to take on new debt?
Not all debt is the same, and there are times where it makes sense to owe some money. Even we have a mortgage! (Who could resist those wonderful 2021 mortgage rates? Our high-yield savings accounts are now growing at a higher rate!) If you have debt that you have had over a long period of time, check in with yourself to verify that you are happy with the progress you made this year in paying it down. If you accrued new debt, reflect on whether that was a good decision for you. Let any decisions you made this year with debt guide you to making better future decisions surrounding debt.
6. What do you wish you spent less on this year?
The previous questions may help you think about where you want to cut spending going forward, but it is important not to cut spending just because you think you spend too much on a category. The place to spend less is the place where you are not adding value to your life. If you buy Starbucks because you are too rushed to make coffee, maybe it is worth making a lifestyle change to shift that habit. However, if Starbucks truly gives you joy, buy it! These categories may include large purchases as well. Are you paying a lot of money in rent or a mortgage without your home adding significant joy to your life? Maybe it is time for a change.
7. Do any purchases make you feel guilty about spending money? What are they?
Analyzing your emotions around spending money often reveals underlying predispositions regarding spending that you may not realize you have. Interestingly, our preexisting money judgments may stem from our upbringings or experiences rather than our values and priorities. Assessing these predispositions allows us to gauge whether our spending guilt exists as a check on our values and priorities or as a hindrance to putting them at the center of our lives.
For example, an early career professional may work long hours due to the belief that working those hours will get them ahead. They want to get ahead to advance quickly in their career so they can travel, often luxuriously. Their boss has a key voice in career advancement decisions and works until 7:00 PM in the evening. They stay to show their dedication and achieve valuable facetime. Since they work late, they are too tired to prepare dinner at home, so they pick up takeout dinner for an average of $20 each weeknight. To them, this is just part of their career advancement goals.
When a friend invites them for a two-week trip to Greece, they wish they could go but feel guilty. They have plenty of vacation days and compensatory time with the long hours they work, but the $5,000 price tag to fly to Greece and pay their portion of the shared villa and food feels too steep. They are just an early career professional with a low salary. They feel guilt that it is too soon for them to take that expensive trip to Greece, despite their goals of traveling luxuriously in the future.
But is it too soon? Their takeout dinners, at $20/night, five days a week, for fifty weeks (I am assuming they take two weeks of travel, even if it is not to Greece!) adds up: $20/day x 5 days/week x 50 weeks/year = $5,000/year!
Learn what spending makes you feel guilty, so you can release yourself from that guilt if the spending aligns with your goals.
8. Did you buy anything that you originally debated buying and were so happy purchasing afterwards?
If you questioned a purchase and then found yourself truly happy you made it, your spending predispositions may vary from your values and priorities. Think about what kind of purchases initially fill you with regret only to have you thankful you made them. If they fit a consistent category, the new year may be a great opportunity to give yourself permission to shift how you spend your money.
9. What were your top three joyous purchases this year?
Is this the most difficult question yet? All of us spend a lot of money. In reviewing folks’ finances we have seen the $1,000 Costco bills and recognize how easy it can be to spend money on just about anything. Our household tries to insert intentionality into our spending as much as possible, and pinpointing your most joyous purchases can give you a great idea of what you really value.
These purchases can be anything and in any amount. For an example, here are Xa’s top three of the year (Do not let these examples bias you!):
A two-week trip to Greece with Patrick and Xa’s parents
Monthly HOA fee that funds the pool, grill, and gym
A $20 roll of self-adhesive foam that facilitated an early return to playing rugby
Here are Patrick’s:
$90/each to upgrade to business class on a Jamaica flight, which led to two $1,000 flight credits
Korea trip to see Patrick’s youngest brother’s family for the first time in almost three years
Baseball extravaganza: ten games in ten days in six parks from Boston to DC with family joining parts of the trip
10. What do you wish you spent more on this year?
Spending goes both ways! Now that you thought about what purchases you value, figure out which areas you wish you spent on a bit more. If a purchase gave you an incredible rate of joy per dollar, it is worth making similar purchases next year.
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