Last week I had two very different experiences, both involving £3 and lattes.
(Sorry in advance for using the over-used latte example. But I can’t rewrite my real life so just hang with me, ok?)
Thursday I went down to the business cafe that I work from a few times a week. It was busy, I was tired, and when they asked if I wanted a latte — like they do every single time I walk in — I said sure. It wasn’t memorable, other than the fact that it was not warm enough. I really hate it when lattes aren’t hot.
I handed over £3 coins and went about my day.
Fast forward to Sunday. Jordan and I piled Henry and Hattie into the car bright and early. He was running a 10k on the grounds of a gorgeous English manor and the rest of us were just along for the ride. Shortly after the start of the race, Henry fell asleep and I was left to stroll around the massive grounds in solitude. I stopped by the little tent selling lattes, handed over £3 in coins and took a long walk through the fields. The sun was in that perfect position — just peeking through the tall, leafy trees— the birds were chirping and the cows were laying in the field. My latte was creamy and I savored every sip fo my very peaceful morning walk.
Each cost me £3. But one was so much more valuable than the other.
The value of $1 (or £1) isn’t created equal.
Studies tell us that we get more meaning when we spend our money on certain things: things that save time, gifts for others, and experiences.
But it really goes beyond that. Certain daily, weekly, or monthly expenditures can add way more happiness to my life. And when I spend money on those things, I am happier. I’ve written about this many, many times before, but this is what makes our no-budget work. We spend on the things that truly make us happy.
And guys, this isn’t just me sitting over here saying we should try to get the most happiness out of each dollar that we spend. It’s related to the economic concept of marginal utility, which basically says we, as consumers, try to get the most value (or happiness) from each dollar spent. I think my econ professors would probably give me a solid C- for that description. It’s probably a good thing my econ career ended at graduation.
Finding money leaks
I’m pretty good at spending my hard earned dollars on things that make me happy and saying not to things that don’t. But I’m definitely not perfect. So I downloaded my bank statement from the past few weeks and went through and highlighted every single transaction.
Green = a ‘yeah’ purchase that made me very happy!
Red = a ‘meh’ purchase that I kind of regret making
Yellow = a necessary purchase that I had to make
In the last three weeks, I’ve had £84.81 of money leaks. That’s $115 in 3 weeks.
When I highlighted things like this, it was easy to see what was a ‘meh’ purchase and what was a ‘yes!’ purchase. Things didn’t break down along the “I don’t get joy from clothes/lattes/eating out” lines. It was a lot more nuanced than that.
For example, I’d been searching for years for the perfect striped shirt and I finally found it. It literally brings me so much joy even when I just see it folded in my drawer. But I also bought a sweater from Zara only to realize that I kind of feel frumpy in it and there is a small hole on the arm that makes me angry. I spent £3 on postage returning something I didn’t really want in the first place (a meh purchase) and £1.50 to send a card to a friend (a yeah! purchase).
And then, of course, there’s the latte.
Do the work
So now it’s your turn: sit down for 15 minutes and find your money leaks. I promise you, they’re there even for the world’s best budgeter. But remember, the goal isn’t to feel bad about what you’ve spent on. It’s to help you find space for more of the ‘yeah’ purchases and less of the ‘meh’ purchases.
Erica Gellerman, CPA
Erica Gellerman is a CPA, MBA, personal finance writer, and founder of The Worth Project: a weekly money newsletter you actually want to read. Her work has been featured on Forbes, Money, Business Insider, The Everygirl, The Everymom, and Lifehacker. When she's not writing about personal finance you can find Erica exploring Europe from her temporary home base in London.
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