Courtesy of Ramit Sethi
Ramit Sethi.
- Ramit Sethi is the author of the New York Times bestseller, "I Will Teach You To Be Rich."
- A few months ago, he challenged his 800,000-plus readers to splurge on something they wouldn't usually buy, and about 600 people took him up on it.
- As their accounts hit his inbox, he realized that no matter how much money they spent on a little (or a lot of) luxury, they all seemed to have the same takeaway: They began to feel differently about money.
Have you ever noticed that the internet is full of advice on how to save money, but rarely do experts talk about how to spend it?
I have a few theories as to why:
- Most of us could probably use (and implement) more saving advice.
- Public reception to other people's spending habits (even if they can afford it) can often be harshly negative. Don't believe me? Just read this commentary of the comments within a certain monthly column about spending.
- We're made to feel guilty about spending extravagantly on ourselves.
Once you've paid off all your debt and have automated your finances to go into savings and investment accounts every month, and you're earning more than ever - what's next?
A few months ago, I issued a special spending challenge to my 800,000-plus readers who can afford to take on this challenge. In it, I asked them to spend $500 on something they ordinarily wouldn't: It could be anything fun or something that they've thought about and kept putting off until "someday." The point was to make it feel extravagant and splurge on something that made them happy.
Some readers stepped up, like this person who upgraded to business class on his return flight (comments edited for brevity):
"What an experience! It was like a secret world was opened up to me that I didn't know existed. I was treated with special care, my bag was marked 'priority,' the flight attendant checked on me regularly so I never had to ask for anything, the lounge had comfy chairs, free food, booze and outlets! I got to rest up 2 hours before my flight and it was amazing.
This has got to be a new standard for me. The crazy part is that I was able to afford this comfortably for a while now but I've just bought the cheapest option since that's how I was raised. I work hard for my money and it took me years to learn how to manage it (and I'm still learning).
I thought I got it before, but now, I get it."
Many more shared their experiences of spending differently than they normally do. For example:
"Yesterday I went to the eye doctor, who told me I could dilate my eyes; or use a new machine that can take a scan of my eyes for $30 extra and I wouldn't have to be dilated. I originally opted out, but after thinking about it more I decided $30 was definitely worth it to have my vision intact for when I got home to get back to work.
I have been thinking all day today actually about what a growth moment that was for me to actually choose and spend more on a better experience. I come from a very humble upbringing, so it's hard for me to not look at 'upsell' things as frivolous or bougie. But I work hard to get to choose the upsell and I'm glad I did!"
And…
"Last year I had an amazing anniversary dinner at Chiggeri, Luxembourg with my then girlfriend. I was still a student at the time and had a monthly income of about 750 € through a student job. I paid about 300 € plus tip, which was almost 50% of my monthly income. And it was worth every penny!
The service was outstanding. Our waiter was such a nice man that you could instantly connect with. I also felt respected despite being a 23 year old in a super fancy restaurant who's not used to eating in places like that. My girlfriend got a lady's menu without prices, which felt also really special and romantic, like we were set back in time. The food was unbelievably good: the portions weren't too small or too big, and it took a really long time to eat everything because it was such a unique experience. All the different flavors and textures were just crazy.
Since this day I never cheap out on eating out anymore. I haven't had such an amazing dinner since then, but when I'm going out with friends or family, I no longer think about how the 25€ steak is quite expensive. It really changed my mind and I now actively look for the 'higher-tier' restaurants anywhere I go."
As I read more of these stories (more than 600!), I started to notice something very interesting:
Whether they spent $30 to opt out of having their eyes dilated, $500 for a fancy dinner, or even $5,000 on a first-class plane ticket, this single splurge fundamentally changed the way they looked at the world and the unending possibilities that money could afford them if they wanted.
"Before I met my other half, I was a miser who ate store brand cereal and waited for four years after a video game I was dying for came out - to then buy it second-hand for dirt cheap. I used the same crappy laptop to do art on for six years, even though it frequently crashed. I even put off driving for six years to save money.
My SO is my polar opposite: his money burns a hole in his pocket. Being together has opened our eyes to the reality of money. I sold my neglected bass guitar and bought a brand new state of the art gaming laptop and have zero regrets because my work and leisure time are dependent on it. I buy video games from franchises I adore the minute I want to play them, but leave the games I'm not impatient for until they're on sale. I buy expensive brand tea and biscuits because they help me relax in the evening but still buy store brand rice because I don't care. I've been learning to drive and can't believe I lived without this freedom from public transport!
And the best part is, my net worth has risen since I started setting some me-money aside because it has limited weak-willed impulse buying."
We all spend our money for different reasons, and it's not about trying to show off (unless that makes you happy). It's about spending extravagantly on the things we LOVE and mercilessly cutting back on the things we don't.
As a reader pointed out once, "It's not a 'keeping up with the Joneses' mentality. You're not spending for others. You're spending for yourself."
It doesn't have to be private jets, expensive country club memberships, or insanely pricey dinners. It could be an everyday item you use:
"I bought a $200 pair of earbuds after getting tired of cheap $10 to $20 earbuds. It was one of the best choices I've made. The difference in sound quality was so astounding it changed my perception of music drastically."
The extra comfort of flying or even the luxury of an $89 pair of yoga pants that feel heavenly and don't slide down is the real stuff - the stuff we actually value, but we don't feel free to talk about publicly, like this woman shared:
"I spend $20k+ on average annually on my ongoing meditation studies/practice. [People] think I'm crazy. Now I don't disclose the amount of money I invest in my meditation practice, and I don't want to invest any energy in trying to change their projections. My meditation practice is the most creative time of my day and studying with the 'best of the best' is important to me! Heck YES!"
What a shame, too. Because we let other people's judgments influence what makes ourselves happy, but what's important to us and brings us joy doesn't necessarily impact anyone else, just as this person discovered:
"I spent $200 on bedding, which is a LOT of money for me: New cover, new blanket, new pillows, the works. It's amazing how much this purchase affected my life. It improved my sleep time, made me leap out of bed because I actually wanted to make my bed, made my house cleaner which lead to me having people over more. Amazing and worth every cent."
I love reading these stories because they show a completely different side to sensible personal finance advice, where you are introduced to a world of thoughtful, conscious spending.
If you're earning more money than before, have no debt and have your savings and investments in order, and are curious to learn more about "the next level" of personal finance, I encourage you to check out my post on how to spend money in a way that's smart and makes you happy.
Ramit Sethi is the author of the New York Times bestseller, "I Will Teach You To Be Rich," and writes for more than 1 million readers on his websites, iwillteachyoutoberich.com and GrowthLab.com. His work on personal finance and entrepreneurship have been featured in The New York Times, Wall Street Journal, and Business Insider.