Are We Overglamourizing Saving Money?
Nothing lasts forever. Everything is finite (Bulwark)
The saving money culture is being preached everywhere and to everyone. When I was younger, my parents would give extra money to my siblings and I to see what we would do with it. The answer was a piggy box: a tiny wooden box with a little opening that lets you put money in but never take it out. The only way to get your money back was to break the box open, which mainly happens during the festive seasons — like Christmas. That premise of saving to use for a later day made sense till we got a little older and had to save for “retirement”.
Now, in my 20’s, saving has become an important topic, and everyone has an opinion on what saving should be.
Last month, I was going to fly home to visit my parents and siblings. So, I asked a friend of my uncle, who works at the airport, to help me book a flight ticket (including a return ticket). Just like every “well meaning” Nigerian, the man proceeded to advise me, “Ella, you are still in your 20’s, you don’t need to spend such an amount on flying when you can spend less than 20% of that same amount traveling by road”. He shook his head before adding, “young children of today want a microwave lifestyle. You need to start planning for retirement, that’s when life happens”.
I took a deep breath in my head and counted to three before answering, “I don’t want to spend 10 hours plus on the road, when I can spend 45 mins. And I don’t want to wait till I am 65 before I start enjoying the little things of life” I looked at him unflinchingly and added, “Thank you for your advice, but my mind is made up, book the ticket.”
(He would go on to report me to my uncle, who I am living with for the year, and I would regret not learning how to book a ticket online for myself).
Don’t get me wrong, I believe personal finance (keyword is: personal) is a very important aspect of our lives. I have been trying to get it right. Over the years, I have read many books about money and finance. My favorites are the psychology of money, smart money woman/ tribe, millionaire Fast lane and the four-hour work-week (my greatest motivator). However, when it comes to saving money, I believe no one is crazy, and we should all do what works for us.
How we choose to spend or save or invest our money should not be up for public debate. The guilt we feel when choosing to splurge into a bit of luxury shouldn’t be so gut-wrenching, and we should also consider why we choose to save rather than spend.
Several budgeting rules are available to help us with our finances: the zero-based budget, the 50:30:20 rule, the pay yourself first, and the envelope system budget. Whatever method you choose to follow depends on what works for you. While I personally use the 50:30:20 rule, I allow myself the grace to tailor this principle to my life and not what everyone else thinks it should be.
Here are 3 questions I ask myself when I choose to save or spend my money
WHY AM I DOING THIS?
There are several reasons why we may choose to spend or save money, and knowing why can make you find comfort in your decision to save or spend. For example, are you saving because that’s what has been preached to you all your life, or are you spending to keep up with trends on social media? The key is doing something that works for you. Like Mark Twain said, whenever you find yourself on the side of the majority, it is time to pause and reflect.
After reading Tim Ferris’ book, The four-hour work-week, I had a clearer picture of what I have always known I was. Tim, in his book, introduced the concept of the “new rich” and “the deferrals.” The deferrals were those who work till they retire and wait until then to live the life of their dreams. The new rich are those who do not want to wait till retirement to live the life of their dreams; they want to create luxurious lifestyles in the present.
I would also tell a friend that I am a new rich while she was a deferral. And she would say, “I am not waiting till 65 nahh, Just until I have enough money”. The good thing is that we respect each other’s choices. When it comes to savings, she might always save more and is happy with her choices — but saving more while missing out on some little luxuries in life is just not for me. I do not care about being a multimillionaire at 60 or 40, but when I look in between, I have missed out on the luxuries that come with being in my 20s. This may seem stupid for someone who has just recently escaped being constantly broke, but I have long defined what I want.
For example, one time, I walked into a beauty store to get skin care products — before now, I always wanted to invest in my skincare; I just did not have enough money — but when I walked into that store and maxed out my card (lol, just being dramatic), I felt a wave of guilt and spending shame. However, getting back home, I tried to analyze why I spent such an amount. I had only recently paid for a course worth twice the amount I spent on skincare, and I had given my family even more than that amount that month. While both made me feel good, why did spending on skincare make me feel guilty? The answer was simple: I felt any form of luxury was wrong because there was no direct ROI, and people would think I was being frivolous. But then, I thought long and hard, I loved how much better my skin was becoming, and I was getting value for my money. Value is why I choose to spend more or save more — Or save more on some months and less on the others.
Like Tim said in his book, “money is multiplied in practical value depending on the number of W’s you control in your life: What you do, When you do it, Where you do it and with Whom you do it.”
WHAT OPPORTUNITY AM I FOREGOING/WHAT’S THE COST OF DOING THIS?
Financial abuse is a thing, and I know that. However, everything has a price. Like Morgan housel rightly puts it, everything has a price, but not all prices appear on labels. The key is finding the price and being willing to pay it. For example, if I decide to spend — say, $1000 on an iPhone as opposed to saving, investing, or spending it on something else, it is not only that $1000 is leaving my account; I am also missing out on the gains that would come with doing some other things — sometimes the gains and loss are more than money.
For example, in Nigeria, Black Tax is a thing. As a first daughter, I experience it first hand. Even after creating a budget plan for my family, they sometimes call with other problems that are outside the amount budgeted. Sometimes, it’s a firm no — other times, I give in. But before I do anything, I have to consider the hidden cost of taking such money off my account. If it’s a health-related issue, I understand the hidden cost of not sparing that money at the moment was nothing compared to what I may spend later. So, I let it go, and that may mean I saved less that month, but in actuality, I saved more. However, If I look at the hidden cost and it’s not worth it at the moment, I may either shift it for a future time when I can easily afford it — if it is just not worth my money, I say no and don’t sweat it.
Same thing with the flight scenario. To me, I was saving time, and that to me was enough reason. The cost of 20 hours plus spent on the road for a trip of three days wasn’t just worth it for me. To an outsider, It may be wasteful, but it’s my money, and it’s not up to people to decide if it’s worth it — only I can decide that. In Nigerian english, “If I broke, na my business ( Lol, don’t get broke, please).
Like Arese Ugwu rightly puts it in her book, the smart money tribe, “it is no one’s job to judge other people’s spending pattern; we all like and value different things. What is considered “frivolous” and “expensive” is relative.”
HOW DOES THIS MAKE ME FEEL?
Emotions greatly influence how we spend our money. In fact, it is a very important determinant of how we save or spend. Living in Nigeria, where I am unsure of what might happen next, coupled with watching many young people I know suddenly pass away, has made me value having millions stacked against the rainy day even less. Does this mean I would not save? — absolutely not!!!. However, I would not deprive myself of present happiness that money can buy against a future happiness that I am not guaranteed. I believe in living for every moment — I want to die empty, not looking back with millions in my account but zero experiences. I like the euphoria of getting excited when opening a new box while it still has significance to me and not simply when I can afford them, but it means nothing. Of course, to do this, I need to set up financial structures that allow me to enjoy the present without compromising the future, and that’s what I aim to do.
As Arese Ugwu puts it, the key to guilt-free spending is setting up financial systems that allow you to know what you can afford and when you can afford it.
Remember that only you matter. It is your money and your choice. Whether you decide to save, spend or invest, what matters is you and the systems you have built.
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