Posted by Maneesh Sethi :: May 25, 2009 @ 6:01 amJust over a year ago, I arrived in London for a weekend trip put on by my school. Students from my class were flown in, put up in a hotel, and fed for free: an absolutely amazing trip, right? However, at that stage in my life, my mind was fixated on frugality: don’t spend any money, save all I can, keep more for later. When my friends went out for dinner, I stayed in; when they went to a pub, I was checking my email. As a result, I wasted an amazing opportunity to explore London because of my extreme frugality.
Fast forward a few months, when I took a five-day trip with a few friends to Amsterdam, in the Netherlands. While we were there, I simply didn’t think about money: if I wanted food, I bought it; if I wanted a souvenir, I also bought it. I enjoyed the stay there an incredible amount, but when I returned home and checked my balance, I was shocked: hundreds of dollars more spent in five days than in the previous month.
What I learned from these two experiences is that there exists a happy medium between these two extremes: one shouldn’t be too frugal, but one should also not spend too much! Given that this is a personal finance and investing blog, I wouldn’t be surprised to find that we have as many over-savers as we have over-spenders. The funny thing is, personal finance blogs almost always chastise people for overspending, but in real life, being too cheap is just as bad.
Don’t forget to live life. If you are saving every penny you earn, but you don’t need to, would it improve your life to loosen your purse strings every once in a while? I found that by creating a set of bank accounts solely dedicated to specific purposes, I was able to automatically deposit a set amount of money into these accounts and spend it guilt-free. I now have a predetermined amount of money dedicated to traveling, to vacations, and to purchases I want to make in the future. Having these accounts protects me from over-saving and not taking advantage of life.
If you are a big saver, good for you: it’s a much better problem to have than spending too much. Don’t forget to take the time to make sure you are living as well, though. Don’t waste your weekend in London hiding in your hotel room, afraid of the conversion rate of the British pound: set a reasonable budget and stick to it.
Are you an over-spender or an over-saver?
1 Comment
I started my adult years as an over-spender, a learned habit from my parents. I got my first credit card at 18 and have been on that track ever since. Last year, I was laid off and received a sizable severance package. What I did with that was painful, but I paid off all of my outstanding credit cards, which totaled about $10k. That left me with a few thousand to put into a savings account, something I had never had before. I found a new job and although it paid less than my previous one, I have learned a huge lesson! Now I am a saver, although not an over-saver. I still have my moments where I spend more than I should - and regret it immensely the next day. But now I have a better pattern for the future. I don't feel comfortable if I don't have a cushion.
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