I have a problem with spending money.
Most people wouldn’t admit that to a complete stranger (that’s you. Hello.) Most people wouldn’t even admit it to a friend. But here I am, a finance blogger, a PocketSmith user of 4+ years, a generic-budget-spreadsheet user of far longer than that — i.e. someone who is supposed to know better and be better at general money-related stuff — fronting up and telling you the blunt truth.
My name is Rachel, and I have a problem with spending money.
But not how you might think.
See, this week I was on the phone with my good friend Ruth at The Happy Saver. Her podcast was my first introduction to PocketSmith, back in the day. Since then, we’ve bonded over mutual interests like long rambles in the Central Otago hills and bemoaning the lack of financial education in primary schools. How do kids these days learn about bank accounts and saving for a rainy day? I dunno. She asked me what my childhood was like in terms of money.
Yes, this is a normal question finance bloggers ask each other, right after “what’s your PAYE salary?” and “2% Paywave surcharge? Tell him he’s dreaming.”
I thought about her question for a bit.
“Well,” I said finally. “I’m a natural saver, so I guess saving has never been a problem for me. My problem has been learning how to spend money.”
She got it. Not everyone does. Let me explain.
I’m one of life’s instinctive savers. For me, there has always been more inherent satisfaction when looking at $5 in my bank account balance than looking at, say, a $5 coffee or a $5 Lotto ticket. But as I’ve aged, I’ve learned that that $5 in the bank isn’t just about satisfaction. It’s a good feeling, sure. That steadily increasing bank balance tells you a lot about a person. It says: I’m planning for the future. I have an emergency covered. I’m in control.
But along with the peace of mind come other, not-so-great, feelings.
I’ve had to learn how to spend money and what to spend it on. I don’t always get it right, even now.
If I spend that $5, it’s gone. I don’t have it anymore. What if I need it for something next week? Or next year? So the bank balance keeps piling up, slow and steady, until I have far, far more than a simple $10,000 emergency fund sitting there. And that’s all it does. It sits there in a bare-minimum savings account. Safe as houses. I don’t put it to work in an index fund or a term deposit to grow, because what if I need to access it suddenly? I can’t afford to lock it away where I can’t get to it. But I’m also not using it. It’s stuck in that dreadful non-space of not being utilised either way. I’m not growing it for the future. I’m not using it in the present. If anything, it’s stuck in the past, devaluing with inflation. So, for fear of losing my money, I’ve created a terrible self-fulfilling prophecy.
If I use that $5 on someone else, I won’t have it when I need it myself. Never mind that I have much more than $5 in the account. Never mind that I have a steady, well-paying job, that I’ve run the numbers, and I can afford to put ten times that amount into charity or investments for the future. No. Why can’t I be generous with what I’ve been given? There’s always a way to make more money. Failing that, if worst came to worst and I lost my job, I have savings to tide me over and get me through. If I help a friend now, they’ll help me in the future. But nah. I earned it, right? It’s my hard work. My money. Mine. My own. My precious.
Hang on, I’ve heard that somewhere before… it didn’t end well.
I have all this money stashed away and no idea what to do with it, so I’ll do nothing. That’s the flip side of contentment; when the little voice that loves stability starts to whisper fear of the unknown. Don’t step out, you don’t know what you’re stepping into. Better the bank you know, with its pitiful rates, than the investment fund manager you don’t, with four times the return and low fees. Better the minimum wage job in your hometown than taking a chance and hopping on a plane to new places. Better the comfort of the known than the excitement, growth, potential, and adventure of the unknown.
But taking no action is, in itself, a kind of action. Doing nothing still chews up time, money and resources. It might not grow your money. It might not lose it in a grand crash. But is stagnating really any better?
All this to say…
It’s an amount that, every month, I have to spend. After I’ve paid living costs, sinking funds, investments, tithes, and so on, this is an amount that goes purely on me. It doesn’t have to be big. It doesn’t have to be splashy. But it does have to be spent by midnight on the last of the month.
It gets me out of my own head and stops what I call the Saving Spiral.
My answer to the fear is this: I have a $10,000 emergency fund. I keep a healthy float on top of that. I invest. I save. I diversify the risk. And sometimes I drop that monthly Splurge budget on a pair of new trail shoes, just because I can.
My answer to the selfishness is this: Look up and out. My faith as a Christian informs this. If someone else has less than me and I’m in a position to help them, why on God’s green earth wouldn’t I? So I buy someone a coffee. I lend a friend a few thousand (interest-free) so she can replace her leaky roof. I make the effort to smile at a stranger on the street.
My answer to the paralysis is this: There are so many options out there. Out of all those endless options, staying still is the worst one. Pick something. I dropped a chunk of my savings on a one-way ticket overseas. I travelled for six months and made friends for life. I moved back home to New Zealand, landed a new job, and moved to a gorgeous mountain resort town (then got a year-long concussion, but that’s another story.)
Do the prep work, do your due diligence, and then move. You might have to start small. That’s okay. Take a chance. Put $10 into a Kernel growth fund. Watch it for three, six, or twelve months. Compare it to that $10 sitting in your 1.5% savings account. Or take a friend out for coffee and pick their brains about that career change you’re interested in. Give a coin to that busker on the street and tell him you love his music. Why not? What do you have to lose?
I’ve had to learn how to spend money and what to spend it on. I don’t always get it right, even now. Sometimes I splurge on the wrong thing when I should take 24 hours to sit on that decision first. Sometimes the lesson is hard-fought. There are times when a transaction, instead of hitting my Splurge category, gets filed under Regret.
But I still think that a misstep now and then is miles better than never stepping out at all.
Rachel E. Wilson is an author and freelance writer based in New Zealand. She has been, variously, administrator at an ESOL non-profit, transcriber for a historian, and technical document controller at a french fry factory. She has a keen interest in financial literacy and design, and a growing collection of houseplants (pun intended).
