Thursday, January 22, 2015

My spending threshold

I always believe we should grow bigger than our problems. It's the way to make a big problem smaller, simply because you've grown bigger in size. I've written about these topics at length here:

1. Of dragons and men
2. The relative size of your problems
3. Outgrow your problems
4. Growing bigger than your problems


In the past, I used to fret about $10 meals. I only had very little pocket money and that's all the budget I had which also includes transport, stationeries and other expenses. That happens all the way up to university where I had to plan my meals properly. If I had too many restaurant meals (even those around $10 to $15), I'll have to scrimp and save the rest of the pocket money to last the entire month. So, during that time, my threshold was $10.


As I work and earn my own keep, that gradually increased to about $25. I fondly remembered the times when I was dating, and I had to spend money on movies, restaurants and cafes...It's not so easy for me. The average spending would amount to maybe $30 per outing, more if you have to pay for the other party. That's a lot of money for me, considering I only have $120 to 150 per month (if I remembered correctly) during my university days. So, during that time, my threshold was $30.




You find that at different periods of your life, this threshold where you have to think hard about spending will increase. From fretting about $10 for a meal alone, to $30 for a day's outing, to $60 for a all-boys drinking session, to $150+ for a good smartphone, to $16k downpayment for a car, to $40k COV and on and on. I think after spending thousands for my wedding and renovation, I don't really worry over things below $100 any more. It's like once you've completed Expert level in a game, playing Beginner level is just a walk in the park.


I think in the past, I was very concerned about the absolute price of things because my budget simply doesn't allow that to happen. Gradually, I realised that shopping for things that are value-for-money is more worth while in the long run. That took a longer time than I feel is right. I used to buy cheaper razor blades, cheaper shoes, clothes but they are really of lower quality. It turns out that I have to spend more time and effort buying newer cheaper and lower quality stuff. That changed when I bought my first pair of good Clarke shoes.


Compared to the usual Bata type (less than $30), Clarke shoes are easily $100 to $150 over. I remembered I took a long time debating over it, trying to work out the sums. My threshold back then was still around $100. Eventually I got won over and that changed the perspective that I see things. Things that I want and will use for a long time, I don't mind spending a lot of money on them. Things that I don't want, even if you give it to me for free, I also won't want it. It's simply eliminating wastage.


That eventually spilled over to food as well. In the past, I would gladly spend less on food so that I can conserve my budget. I would never order fruits...a platter of it cost more than what I spend on a proper meal - a meal that consists mainly of carbo but is filling. Drinks? No way, I would never order them since ordering one soft drink can be half the cost of my meal. I'm glad those days are over. The health effects of such actions cannot be belittled. But that was in the past when money was tighter than it was now. I'm glad I lived through it though I hope I'll never go back to those 'dark days' again. And who I am now is shaped by the experience that I had in the past, so no regrets over those. I'll probably do the same thing again if I can go back time.


Back to the topic of growing yourself to make your problems smaller. My stance is this...you can only save so much, and there's only so much cost to cut. Once you've done what you can to cut your expenses without feeling unbalanced, the only way to grow is to increase your earnings. Once you start finding ways to increase your income, you find that you're not just surviving. You're living a proper and balanced life. Maybe even thriving. What's balanced is subjective, but I think if you feel shortchanged by your own circumstances, that's not balanced anymore. I'm not a hermit and I need to spend money, and so I do. I shouldn't have to feel guilty over this.


In the midst of saving up and planning for the future, remember to live a little right now. While it's important to hedge for a long life, it's equally important to hedge against an unexpectedly short life. Financial freedom is a mindset where money is no longer a concern. A situation where you have too much money and you're still concerned with money is as bad as a situation where you have too little money and you're equally concerned over it.


Okay lah, maybe the former is a little better.


22 comments :

Createwealth8888 said...

I can still remember those days of debating in the cbox over shoe. LOL!

Createwealth8888 said...
This comment has been removed by the author.
la papillion said...

Hi bro8888,

Haha,indeed, I remembered it too! But I think I had already enlightened before the debate. I was saying, along with you, that it was very well worth the money for a good pair!

Singapore Man of Leisure said...

LP,

A timely counterbalance to some of the extreme frugal views out there!

Thrift is a virtue.

Being a miser is not ;)

Createwealth8888 said...

How to know whether I am a miser or not?

S-Reit System Investor said...

Hello LP,

I am glad that you have taken a balanced view toward money and expenditures. I have sort of a 'twisted' view - I wouldn't mind spending more on fresh groceries and quality stuff for my wife and child, but I am very stingy on myself. I would go for only $15 CK long-sleeved shirts and $40 Bata black shoes. LOL

I also try to minimize touching my salary while looking for ways to get side income, e.g. focus groups, answering surveys in exchange for NTUC vouchers etc.

So far, I don't have a morale problem since I have a view that every dollar saved is a warrior to help me fight inflation. I can invest the dollar to earn more.

To add to SMOL's comment, "Oh no, I am a MISER. How?!"

Createwealth8888 said...

Save on ourselves and spend on our family is called Love!

Singapore Man of Leisure said...

CW, S-Reit Investor System, and others who bear the guilt of your miserly ways...

Buy me a drink and I shall absolve you from your stinginess craze.

Treat me a meal I shall sing an ode and shout your name in praise!

B said...

Hi LP

Good post!!!

Like you, my threshold has increased over the years as we have higher incomes today than previous year.

Strangely there are some things that the threshold could not increase correspondingly with income. For example, taking business class flight seemed like a no no despite the increase in income. Why so? Is this more psychological more than money issues? Affordability is one thing, but this goes beyond the threshold. It seemed to put a cap somehow.

Sillyinvestor said...

Hi LP,

I was the opposite. I was a spenddrift in the past. Now, I get my daily expenses to $3 a day on my week days. Bring breakfast and eat canteen, snack on fruits etc.

Weekends, I try to get to $250 for family done out. Think it's easier now.

But, I think when my family ask for a good meal, I will most probably obliged.

I think costs wise, I reach or near limit le. As for income, can only hope to invest wisely to build a bigger portfolio over time.

At the same time, enjoy work, enjoy life. Enjoy bantering with bloggers like you.

But CNY is a super high expense month !!

la papillion said...

Hi SMOL,

Haha, I've been to one extreme (the frugal side) and survived, and so I live the tell the tale of the other more moderate side ;)

la papillion said...

Hi SRSI,

Actually me too. Usually I'll buy things for my wife and she'll buy things for me. I'm still frugal but I'm a lot more willing to buy things for my wife. I'm think she's the more that keeps my view point balanced :)

la papillion said...

Hi B,

I agree! There's somethings that I would not spend money on and I think no matter how rich I am, I still won't do it. It's just that spending on such things don't really align with my values, so it's not just about the money i guess.

So, besides buying things that are value-for-money, the money spent must also be aligned to the values we aspire towards.

Thanks for commenting so that this becomes so much clearer to me!

la papillion said...

Hi SI,

Haha, so do you think starting off as a spendthrift then frugal is better or the other way? Is there a lot of sacrifices to make when going from spending a lot to spending a little? or is it more fun trying to spend more now compared to the past?

Indeed, Dec, Jan and Feb are the months I usually spend a little more. But all for good fun :)

Sillyinvestor said...

Hi LP,

Hmm it's not fun, but it's no longer painful. I think I am better off as a person, able to fight off little temptations of indulges for coffee shop breakfasts or lunch.

Even when I am out in the weekend, I spend zero on myself usually.

I really do not need anything. Just need a phone, connection and annual reports.

Think it's easier to save and spend then going from spend to save. Went through a period of inner demons ...

But to be more actual, I went through a phase of frugal, then spendthrift then back to frugal again.

But I still spend la. My wife told me she really like to go on a cruise. My immediate reaction is later la, but think I might just go la. I get to enjoy too. She happy also good la

la papillion said...

Hi SI,

Haha, I think we're quite similar..I'm very low maintenance and I don't think I'm ever been a spendthrift. So you can imagine I go from very very tight-fisted and then getting looser and looser with each passing year. It's also not easy for me, and I always wonder if it's harder going the other way i.e spendthrift to frugal.

But do go for the cruise! Such experiences should be good for the family :)

Derek said...

Hi LP,

Great post. My transport habits over the years.

When I was 16, I had to 'taunt' the night to wait for the first MRT/Bus.

When I was 20, I will look for friends to share cab with.

When I was 24, I had to wait an hour or so to take the night rider home.

And now, I take a cab even though it is just 4 bus stops away. LoL

Anonymous said...

Excellent post LP!

I personally have come a long-way. Balance as you have said, is key.

Regards,
JW

la papillion said...

Hi Derek,

Hey hey hey, I also have this kind of experience before! Takin a cab has never crossed my mind before... Will rather wait till morn for the first bus or train to come!

Really, our threshold for spending increase as we get older :)

la papillion said...

Hi jw,

Thanks! Still balancing out my savings and spending for me haha

RetailTrader said...

Hi LP,

Good post, you basically set out my approach towards how to spend money well heh

la papillion said...

Hi retailtrader,

We're sama sama! ;)