Many public finance bloggers talk about the importance of goal setting when you’re trying to get out of debt and start saving. They suggest putting a picture of Tahiti or the house you’re going to buy on your fridge. If you don’t have any goals, then you must manufacture one so that you can strive for it as you eat your meal of rice and beans.
Sure, goal-setting can help you be more disciplined in your saving/spending… but to what purpose? If you have to manufacture a goal does that make scrimping a better use of your money than not having that goal and just spending the excess?
The ability to buy fancy cheese every week at the grocery store is not the kind of thing that usually comes as a set goal. But if you don’t have some pie-in-the-sky goal, maybe you’ll feel less guilty about doing it!
Tied with this is what to do with your extra money once the debt is paid off and you’re saving at a nice clip for retirement. “Savings goals” become “spending goals” if your saving is only motivated by the things that you can buy. Sure, you should loosen up your lifestyle a bit until it’s comfortable, but there’s no reason to look for places to spend your money. Eventually a reason to spend it will come to you on its own unbidden. Having a lot of money saved up can provide freedom.
If you get a windfall, don’t think, “let me find something to spend this on.” Either you’ve got a list of things you need/want to buy or you can stick it in savings, because something you need/want to buy more than whatever you think up now will come later and you will be prepared.
Our first two years with real jobs (but used to living on a tiny fraction of the salary in an expensive city), DH and I had this discussion– what should we do with the extra money? Save or find some way to spend it? Two years later a very good, very expensive, reason found us and we were very glad to have that extra money saved. We were able to do something wonderful we would have been unable to do otherwise.
Now, that isn’t to say you should keep washing out baggies etc. if you’re putting away 100K/year, unless you *want* to wash out baggies. Just that finding spending goals isn’t necessarily the way to go. Find a standard of living you’re happy with and don’t look for things to purchase. Save what’s leftover.