Frugality and spending

Frugality and spending are neither virtues or vices: Finding a balance that works for you.

I drive a 1997 Honda CRV. I have always driven used cars, except for a short period when I had a new car for my job. Why? Why forego the reliability, bragging rights and delicious smells that come with buying a new car? Because I want to spend the month of May with my family in Spain.

I am very clear that saving up for, or borrowing to buy, the latest model year would reduce my options to travel. And I’m not willing to make that trade-off. But I wouldn’t call that being frugal. Some people would think we’re insane for what we’ll be spending on the apartment in Barcelona and the tapas to go with it.

People can be pretty judgemental when it comes to money: Savers are responsible. Spenders are not. Savers are letting their lives drift away while spenders are living theirs to the fullest. But I don’t think the moralizing is particularly helpful. Instead of a right way or a wrong way to use your money, I think that we’re all just making trade-offs. And as smart, capable adults we can do a better job of getting really clear on the trade-offs that we’re making.

For example, choosing to eat out is a trade-off against something else, say paying down a credit card, funding your kid’s university savings plan, or taking a golf lesson. But if you love eating out and you’re clear on the trade-offs, then ‘waiter, bring another round’. Compulsive savers are also making trade-offs, choosing a bigger bank balance over experiences and creature comforts. For the most part we go through life without really thinking about the trade-offs we’re making and instead worship at the altar of avoidance or guilt.

Knowing the trade-offs you’re making can be really helpful.

-New car or 1997 Honda CRV + Spain.
-Finding a great financial adviser or staying with current adviser + using time to watch football/Real Housewives of Atlanta.
-Big bank balance or average bank balance + experiences.

What are the trade-offs you’re making? And now that you know what they are, is there anything that you would do differently to get a handle on your money so you can live the life you want?