We got a link from mothers in medicine the other day.
The link was about how one of our DH’s has an allowance, but it also seemed to contain a misunderstanding of our financial selves.
In case there are widespread misunderstandings, we thought we’d clarify a few things. We are not the FrugalWoods. We are not Mr. Money Moustache. We don’t think you need to spend nothing. (Nor do we think you need to outsource everything!)
We have a strong belief that you should spend where your utility curve hits your budget constraint in a multi-period model that includes the possibility of negative income shocks. We understand that each person has his or her own utility curve and budget constraint and probability of positive and negative shocks. In other words, do what makes you happy in both the short-term and the long-term (so long as it doesn’t hurt other people).
What we do doesn’t mean that’s what you should do. Our utility curves and budget constraints are probably different than yours. Which is a good thing or Paradise would sink into the ground from too many people.
Yes, for our sins, we are doing just fine with our finances. How do we know? Our use of money aligns with our values. We’re on track (or getting on track) with retirement savings and so on. We have contingency plans and emergency plans and so on. We’re going to be ok in most scenarios (and have, so far, been financially ok when life throws curve balls).
No, we’re not planning on retiring early. No, we don’t think you need to pay off your mortgage (or even have a house at all!)
We spend a ton of money. Are we frugal? Well, if frugality means spending in accordance with our values, yes. But we’re frugal conditional on making a ton of money. What we spend these days wouldn’t be frugal for say, us even 5 years ago (even 2-3 years ago), because we didn’t have as much money then.
Yes, we’ve sacrificed in the past which means we can spend more now. Yes, savings and other kinds of cushions have helped immensely when job plans have changed and we’ve been grateful to our previous selves. Savings has meant that one member of each of our family units has been able to escape terrible jobs without a new job lined up. Money really can buy freedom and peace of mind.
Are you doing ok?
Well, we don’t know. If you’re complaining a lot, then no, you probably aren’t.
Otherwise, that’s something only you can answer. We recommend checking out financial calculators and maybe the balanced money formula and so on. Make sure you’re doing the basic good things with your retirement savings (ex. low fee index funds). That sort of Money 201 stuff. If you’re not doing ok, then it’s time to rejigger the Money 102 stuff, or possibly even Money 101.
We’ll only judge your spending habits if you’re perpetually bragging about how much you make, complaining about all your debt, bragging about all the luxuries you spend on, and talking about how nice people who make less money than you do are continually buying you necessities because you had an emergency but spent all your money on luxuries. We find high income people who complain about the consequences of their bad choices and treat other people badly to be irritating.
But otherwise, you buy whatever lattes or fancy vacations or nice cars you can afford (given on-track savings) if that makes you happy. It’s your money!
And what *we* do is irrelevant to your financial well-being. Either you’re saving the right amount for your situation and spending on the right things for you or you aren’t. What we spend or don’t spend isn’t going to affect that. So even if we were the Frugal Woods, that wouldn’t matter for your bottom line.
Still, we’re not. And we like it that way. :)
Do you feel judged by other people’s financial choices? Also– did you think we were super-frugal low spenders?