Thursday, June 25, 2009

Personal Finance as a Personal Choice

This has been a great week for blog articles! Check out this one by Patrick of CashMoneyLife called On Spending Consciously.* This one brought up something I have been thinking about a lot for the last couple of weeks - how people choose to spend their money.

Patrick's post mainly deals with making sure that you are spending money consciously and only when it is in the budget - as opposed to unconsciously frittering away money you don't have out of habit. I would guess that most of us, especially those of us have lived any part of our life without a budget, are guilty of some degree of unconscious spending. Getting it under control is a big part of the granddaddy of all personal finance rules, "Spend less than you earn."

This concept of conscious spending ties into another concept I've been musing about - priorities. I'm not the only one who thought of that, check out this comment to the article from Miranda:

You have made a great point about PERSONAL finances. What works for one person doesn’t work for someone else. But, for everyone, the key to successful finances is planning ahead and making sure you are in a position to spend what you do.
Back when I was a kid, my mother used to frequently comment on other people's priorities. She would see a broken down, ill maintained shack of a house with a huge, shiny boat in the driveway and shake her head and say, "Well, you can see where their priorities are." As I have grown older and met people from all different walks of life, I've learned that it is hard to know the whole story. Maybe it is a rich uncle just visiting and planning on taking his nieces and nephews for a boat ride, maybe they live on their boat and the shack is just a place to keep a few possessions, who knows? My phrase tends to be, "Well, that would not be my choice, but if it is working for them - "

But that doesn't mean that sometimes I'm not judgmental...

Recently an acquaintance and I were talking about finances and she told me about her personal situation. She had chosen a different way to handle it than I would have - it was definitely one of those "Well, that wouldn't have been my choice" moments - but at the same time I was really impressed with her bravery to meet the problem head on to work out a solution that fit her needs.

Then a few days later I saw her again and I commented in passing about her cute summer sandles. She grinned and admitted that she had treated herself to a pedicure for summer. I said something nice, but as I walked away I was a little bit shocked. This was a person who had admitted having some financial budgeting problems, and who had the guts to make a big bold step in tackling it... but now she was wasting money on a pedicure??? I shook my head in self righteous disgust. I started thinking about a whole blog post about how a bottle of salon quality OPI can be bought at ULTA for $8.50, but there are always coupons or sales, and if you compare that to the $30-$40 (plus tip) a pedicure might run at one of those little nail places....

It wasn't until a little later I realized what I jerk I was being. I knew that as part of her plan she had given herself a little "mad money" each month. Who was I to instantly assume that this pedicure wasn't budgeted as part of that discretionary income? I was so busy mentally looking down my nose that I didn't think about the fact that I have a dining out fund and an entertainment fund. What is the difference between spending $40 on a pedicure or spending $40 on dining out if it is in your budget and you can afford to pay for it? Just as Miranda said, personal finance is a personal thing. Maybe you are saving for a big boat to sail around the world, maybe you would rather paint your own toenails, maybe you are saving every penny you can for an early retirement. The important part, as Patrick pointed out, is that you are making conscious purchases that you can afford.

I read a lot of financial blogs and I see a fair amount of this kind of judgment pop up on other people's finances regularly (especially in the comment sections of more popular bloggers.) It as though there is only one way to financial health - their way. But you know, my mom was right, people do have different priorities and just as there are different ways to budget, there are different ways to manage finances.

There are times when I see people get into the same financial problems over and over again, but unless I know the whole story, I am going to make an effort to be open minded about it and more accepting that everyone has to make their own path... after all, I've certainly made enough odd choices of my own!

* Thanks again to Kristy of Master My Card for pointing this one out!

Photo by: James @ NZ


Frugal Dreamer said...

Good points! I cannot STAND judgmental (anonymous) comments! It's as if people forget just how HARD it is to change bad habits! And how much perserverance it requires.

Frugalchick said...

I think Frugal Dreamer has a bit of a side point here--learning about frugality and finance is a *journey.* I don't think there's ever an end destination. We're all at different points, and we all have different struggles, wishes, loves, priorities, etc. I find I can be so quick to tear someone down (those snap judgments) when I should always be looking for ways to encourage others.

Frugal Dreamer said...

Wow - I was totally jaded and cynical when I wrote that! hehe ;)

Dawn said...

Frugal Dreamer - I've gotten some negative comments too. I try not to let them bother me too much, but it is a bit discouraging sometimes since as Frugalchick says, we are all on a journey.

Frugalchick - I think you make a really good point. That is what I am going to strive for - not to be too quick to judge.

Patrick said...

And your friend may also have had a gift certificate or coupon, or received a great discount from another friend she knew who worked there... It's tough to be quick to judge when we don't know the full story... But it's an easy thing to do!

You wrote a great article, and thanks for the mention. :)

Dawn said...

Patrick - You are absolutely right! I didn't even think of that angle. Just one more reason to wait until you know the whole story.

Slinky said...

Great post. Those sorts of comments are a huge peeve of mine and I've been running into a lot of them because my fiance and I are choosing to have a nice wedding. A lot of people in the PF world think that's a huge waste, and to some degree it is. But it's something we want to do and we're saving the money to do it.

Dawn said...

Slinky - as far as I am concerned, if you got the money to do it and you know what you are doing (not going in blind) then you should go for it!! Life is meant to be lived, after all. You have your priorities and that is fabulous!