Learning How to Spend Money Without Making Any
It’s been about a month since I quit my job, beginning a career break. I’m still keeping busy, giving myself things to do every day. I’ve also been planning trips, handling my own health care, and pursuing new hobbies. All of these involve spending money, something that I’ve often been uncomfortable doing, even more so when I don’t have a salary coming in.
I started my career in 2003, when tech salaries were a lot lower than they are now, and when offshoring and outsourcing were widely expected to limit the market for American software developers. Both of my parents lost their jobs in that year, too. That led me to watch my expenses carefully, and to save money as much as I could, to prepare for a time when I wouldn’t have a job. Many personal finance books, including my own, emphasize the importance of saving money for future goals. Last year, I read a couple of personal finance books that explore the importance of spending money: Die With Zero and Tightwads and Spendthrifts. They’re good reads that made me think about perspectives that value experiences and relationships over savings balances and returns on investment. In Die With Zero, Bill Perkins asks readers who plan to hike the Pacific Coast Trail or the Grand Canyon whether they’re going to wait until they’re much older before doing so, and emphasizes the benefits of spending money on satisfying and celebratory experiences. Tightwads and Spendthrifts documents Scott Rick’s research in relationships where partners have different approaches to spending money. By the latter book’s definition, I am a tightwad, and this year, I’m trying to be more like a spendthrift.
The career break has shifted my thinking about time for what I’m still calling “vacations”. I had a scarcity mindset about using my vacation time when I worked for companies that gave me annual allowances of it. A couple of my employers instead had “unlimited” vacation time, which was more convenient because I didn’t have to keep track of balances, but social pressure still limited how much time I used. This year, I’m taking an abundance mindset, traveling more, including a few road trips in the Pacific Northwest. I also want to spend more time with friends, family, and former co-workers, including people who are interested in career breaks of their own.
As the books above say, excessive stinginess can put a strain on relationships. Nobody wants to be the friend who is auditing and criticizing others for making overly lavish plans. Splitting every bill, so everyone pays their share, multiplies what behavioral economists call the “pain of paying”; to avoid this, rotating the duty of picking up the check reduces the pain to one person per bill, and in the long run, it results in less painful experiences. I’ve been uncomfortable in situations where I feel like I’m paying too much or that another person is paying too much, but in a healthy relationship, there should be enough chances such that things even out, letting trust build over time.
I didn’t grow up poor, but I’ve had a scarcity mentality about money for much of my life. As a kid, with a modest weekly allowance from my parents, I knew exactly how much things cost, down to the penny. Even as an adult with a steady income, I would try to buy the least expensive product that did the job I wanted to do, wary of wasting money. Products that can last for 10 years or more might cost more up front than disposable products do, but because they’ll last for longer and I won’t have to waste time and energy buying more junk later, they’re a better deal. “Buy nice or buy twice,” said Tom, a former coworker and avid cyclist about buying gear, and after buying some bike accessories that broke too quickly, I agree with Tom’s assessment. For example, I recently replaced a pair of Patagonia rain pants whose waterproof lining had developed many holes; I was worried because I’d bought them in 2014 and I couldn’t find the receipt, but the local store replaced them with a brand-new pair, at no cost, in just a few minutes. Companies that are known for high quality and great service are hard to find; high prices alone don’t say anything about quality or warranty coverage, as my experiences with Bose headphones and Apple earphones show. (I recommend Anker earbuds now; they sound great, they last just as long as the high-priced brands, they’re way less expensive, and they have a 50% longer warranty.) I now better understand the value of buying from good brands and good stores, rather than looking for individual products, to get the best long-term value for my money.
Die With Zero introduced me to the word “decumulation”, the opposite of accumulation, in the context of money. Multiple people mentioned in the book had so much money saved that they would not spend it all, but the fear of decumulation led them to continue stressful jobs or to keep excessively tightfisted budgets. The line graph of net worth over time, for most workers, keeps going up while working, even if the stock market has a down year. The worry about net worth decrease is real, and it leads to terrifying hypothetical scenarios that a person might run out of money or have to seek a desperate and unlikely return to the workforce in old age. The books mentioned above, and also Taking a Career Break for Dummies, reassured me that most people who stop working significantly overestimate how much they’ll need to have saved. A lot of my time is being spent learning new skills, picking up old and new hobbies, and connecting with more people; none of this is expensive enough to bust my budget. The mindset change is the hardest part.