BY THE TIME we reach our late 20s, we’ve made a set of fairly inflexible choices that dictate our ability to spend and save. Our career arc and earnings potential are established. Our debt from undergraduate and graduate programs has been accumulated. The number of dependents we’ll support is getting clearer. Changing any of these decisions is either impossible or mighty tough.
But there’s a second tier of financial choices that are in constant flux—and where we have the greatest flexibility to influence our spending and saving. Remember, spending and saving are a zero-sum game, so it’s all about tradeoffs: If I spend X, I can’t save Y. If I purchase Q, I won’t be able to afford R. If I prioritize M, I need to forgo N.
My wife and I discuss these tradeoffs as we make spending decisions. For us, it means that, even though we hate cleaning the house (and who doesn’t?), we aren’t ready to spend $150 a month for a cleaning service. Instead, we’d rather allocate these dollars to a larger grocery budget, knowing that we often choose to shop at Whole Foods and specialty stores. More recently, we started regularly donating to our favorite charities. This has meant reducing our monthly entertainment spending to offset the contributions.
Want to make these sorts of tradeoffs? Consider the potential value-add of any expense. Sometimes, it’s negligible or negotiable. I am happy to forgo an expensive gym membership and, instead, use a budget-priced, no-frills gym. It just doesn’t greatly impact my overall experience.
On the other hand, Sarah and I still buy paper copies of every book we read. While we’d save money with e-books and even more with a library card, we love owning books. The $50 a month we spend on books feels like it’s worth the joy it brings. In other words, budgeting doesn’t always mean choosing the most frugal option. But it does mean recognizing that, with every spending choice, we give up the opportunity to use the dollars for something else.
Zach Blattner’s previous articles include Money Pit and All Too Predictable. Zach is a former teacher and school leader who now teaches teachers across the Philly/Camden region as a faculty member at Relay GSE. He is a self-taught finance nerd who dispenses advice to his wife, friends, family and anyone else willing to listen.