Avoiding Aspirational Spending
When it comes to staying on a path of righteously frugal living, my own personal Kryptonite is clothing. I'm not one for spending on dining out, and I don't indulge in luxuries like a big screen TV, but my head is easily turned by a cute pair of shoes or colorful top. That's not a huge vice, I guess. I mean public nudity IS frowned upon, so clothing is a necessity. Where it becomes very detrimental to personal finance, however, is when my wardrobe budget is spent on items for life I'd like to be leading instead of the life I actually live. (See also: Where to Buy Discounted Designer Clothing Online)
Fashion blogger Robin of High Heel in a Haystack summed it up perfectly when she said, "Buy clothes that you will wear on a Tuesday afternoon, not a Saturday night. Very few people lead Saturday night lives."
This is very fitting (excuse the pun) advice for making sure clothing purchases turn out to be money well spent. Yes, that tux might make you look better than Clooney on the red carpet, but how often do you get an invitation to a movie premiere? And those sexy stilettos might be the absolute perfect touch for doing the tango in the moonlight on the deck of the Queen Elizabeth, but is your lifestyle more daycare drop-offs than cruise ship dancing?
It's not just clothing that's relevant for the "Tuesday afternoon" benchmark; all financial outlays should be held to this standard. You've heard of "lifestyle inflation," where your standard of living expands to meet (and sometimes exceed) your increasing income level? Well, "aspirational spending" is a similar phenomenon where purchases that one makes are out of sync with one's actual way of life.
For example, you might picture yourself as a rugged individualist. An outdoorsy, camping, get-close-to-nature type. For that reason you own a four-wheel drive, off-road vehicle — which, 99% of the time, is used to transport you to and from work on paved highways. On a smaller scale, perhaps you're like my brother who had a job that kept him traveling about 75% of the time. Despite that, he shelled out about $150 each month of premium cable channels that he was never around to watch. Or like me, with an unlimited talk, text, and data smartphone plan even through my Android device is used primarily as an MP3 player.
Aspirational spending could come in the form of a purchasing a home with a pool for that one holiday weekend a year when you actually get it together to have a backyard barbecue party with all your friends. Or that fancy health club membership that you signed up for as a New Year's resolution but haven't used since January 15th. Or a top-of-the-line Viking gas range bought to tap into your inner Jacques Pepin when you're more of a microwave/take-out kind of person.
One way to avoid aspirational spending is to make mindful cost/benefit assessments before committing to the expense:
- How often will you use the item?
- Are you paying for features you don't need or want or use?
- Is there a less expensive comparable option?
- Are you buying to service a current need or a future desire?
- Does the item fit into the life you live or some "dream" lifestyle?
- Can you live without it?
When you actually take time to assess whether or not what you're spending money on adds value to the life you live rather than acting as a psychological placeholder for the life you think you SHOULD be living, you may find that there's an awful lot of spending on dresses for parties you'll never go to, sports equipment when your main form of exercise is clicking the remote, or that souped-up smartphone that doesn't mesh with your technical IQ.
It can be humbling — and maybe even a little depressing — to acknowledge that you don't actually NEED a Cannondale Supersix EVO Ultimate sports bike because you'll never compete in a triathlon, much less the Tour de France, but it's also freeing in the long run.
By making sure your purchases reflect your actual day-to-day habits rather than some dream lifestyle you don't actually live, you can funnel the money that would have been wasted on out-of-sync spending into savings, which can help you to attain financial freedom. And once you do that — who knows? Maybe you'll then have the wherewithal to actually pursue that Saturday night life after all!
This is a guest post by Stella Louise, editor of the Savings.com Blog & Save, a lifestyle blog for savvy consumers.