We’ve probably all heard it before: “Every dollar counts”. And so every dollar does count. But does every cent count, too? How far does this way of thinking really go? If you are one of the ultra-rich, earning a million dollars a year, does every dollar still count to you?
In a way, dollars only count relative to your need for them, in the same way that cents usually don’t matter to most of us: they simply aren’t noteworthy in comparison to our monthly spending. I earn far more in one hour of work than could be worth my time trying to save cents.
I occasionally feel guilty for spending money. There is still that bit of “poverty spirit” in me that grew up without money, and I sometimes feel what I call an “existential guilt” for having money. What will people think of me if I buy this or that? What about those who need this money more than I do? I know, intellectually, that I’m not responsible for this problem, but sometimes I still feel it. Such a strange neurosis. Earning good money doesn’t make me better than anybody, but I still get to enjoy its fruits in that there are times I can throw out large sums of money and simply not care about it. But that’s only because the relative value of one dollar increases the fewer dollars you have and decreases the more dollars you have. This is just pure economics.
I write very candidly about money in this blog for informational purposes. I think this is important because American culture is very shy about specifics. Some people will think my spending is egregious, while others may think my spending is fairly stingy. And that’s the whole point, right? Everybody will react differently. What I state, I state as a matter of fact in the hopes that it will provide some sort of baseline for others to reflect on their own circumstances. However, there’s simply no way to present my opinions from every angle. Personally, I think of myself as “loaded”, but only because I grew up lower middle class. Anybody who grew up in the upper middle class would probably not think my salary is anything special. But perspective and attitude make all the difference: I’m very grateful for the things in my life, and I know that I didn’t get here alone.
See, the challenge with considering the value of a dollar is that those dollars add up so very quickly. If you live frugally in every area of life, you may find that your saved dollars will make you very wealthy. Some FIRE bloggers became financially independent before they even knew what financial independence was!
But what’s the goal of money? Let’s say you reach age 80 and pass away with $10,000,000 in your investment account. If you have kids and you will this money to them, it will probably ruin them unless they were already good with money. And why in the hell did you die with $10,000,000 in your investment account? That sounds like somebody who was more afraid to live than to die! They should have known well before age 80 that their days were numbered. Now, that’s not to say that life is the equivalent of spending money, quite the contrary. But I can think of a lot of cool places I could have visited and cool things I could have done with that kind of money.
Sure, most people are not going to die with $10 million invested. Most people will be happy if they can simply afford to live in old age, which takes only a fraction of that. And that’s exactly the point.
Now, for me, why I believe in being vigilant about money is because I realized over time that the vast majority of things I buy do not dramatically improve my life. I tried to highlight this in my “Best and Worst Purchases of 2019” post [I kind of despise back-links, I promise it exists, though]. When you are spending money on things that don’t actually improve your life, that is wasted money. And you see it happening everywhere. One of my big goals is to reduce this waste. Stop spending money on junk, start spending money on the things that enrich your life! But of course, tweezing out the difference can be really hard. We all suffer from occasionally buying things that suck, and these wasted dollars really add up.
So yes, every dollar counts! But one way to think of it is like this: every dollar you spend that does not legitimately enrich your life counts against you!
This is where I have to be really careful. I naturally have a do-it-yourself attitude toward most things, but damn it’s nice to be able to pay somebody to do the work on your car sometimes. I’m a firm believer in educating yourself so that you aren’t living in fear of things, but I suppose I need to be a little more heavy on the nuance that some people either hate or are otherwise really bad at DIY activities, and paying somebody else is usually worth it for them. Just…don’t complain to me about how you don’t have any money for something simply because you were too lazy to learn about it on the internet, the single greatest learning tool in history. Did we all not spend 12(+) years learning how to research crap? Ugh. I don’t have a lot of patience for willful ignorance, but…I suppose everybody’s shoes are different. I still need to learn basic electricity.
What’s really hard about personal finance is that it’s so…personal. It’s really hard to give blanket statements that apply to every circumstance, but the human brain just doesn’t work very well with this. We want solid, incontrovertible talking points. And I’ve probably been guilty of buying into some of those, especially when I first started this “quest” for financial independence. And that’s something I need to think more about.
If we were buying things that really positively affected our lives, we wouldn’t have closets and garages and basements and attics full of unused stuff. Now, I have a post I’d like to write about the different types of stuff that are out there, and not all unused stuff is bad, but sheer quantity is a really great indicator of whether our money is being used for our benefit or not. I don’t value luxury cars, status symbols, and technical gadgets the way an awful lot of people do, and as a consequence, most of that money has instead been redirected to my investment accounts to prepare for a future that buys me options. And these options are really, really exciting to me. Those are options that should greatly benefit my life.
But that doesn’t mean that things haven’t positively affected my life either. I spent a lot of money on an i-beam pull-up bar, and I really love it. Not because I’m some muscle dude, but doing pull-ups is a weight exercise that I really enjoy, even if I can only do maybe 3 in a row. Currently, I’m working my way up to doing my first wide-grip, angled pull-up, and I can’t wait to make it happen. It’s been a few years since I could do these on a regular basis, and I’m really glad I purchased this.
Every dollar wasted counts against you. Every dollar not wasted counts for you. And sometimes, as long as it’s not simply a bad habit, not worrying about your money can be good, too. Life is more than these obnoxious “tips” and “tricks” for saving money. I wouldn’t discount all of them, but the value of each depends highly upon your circumstances. What are you saving money for? Is it just fear? A desire for control? Or do you have an idea of what a good future looks like for you? These questions are more important than worrying about the value of a single dollar.