A Personal Example
It’s true. I’ll admit it. Sometimes I think about money too much.
Here’s an example:
A while ago I needed to take a Lyft from my house to the airport. It’s something I’d done before and have continued to do many times since. Catching a Lyft is an easy thing to do. In fact, it’s a very extravagant thing to do when you consider you’re hiring a personal driver to pick you up and drop you off at the exact locations of your choosing. And for some reason, in this particular instance, I seriously considered driving to work (which was closer to the airport), parking my car there, and then catching a Lyft — all to save a couple bucks!
A Lyft from my house to the airport typically costs $20-25, while a Lyft from work to the airport typically costs $10-$15. That’s right, I’m talking about saving $10! While I would save some money, I would also spend more time driving to work, waiting for a Lyft there, and then picking my car up at work and driving myself the rest of the way home when I returned on a late flight later that week. I was considering trading time and convenience for money. (To be clear, there are times when doing so would make sense in each of our financial lives.)
I ended up taking a Lyft from my house (thanks to someone pointing out the insanity of my reasoning), and it turns out they were having a promotion for rides to the airport that day. My ride ended up costing less than $15 – a nice bonus but not totally my point. Spending extra money for the added convenience and time-savings was worthwhile to me, and understanding how and why we make these decisions can have a positive impact on our lives as we make future financial decisions.
A Podcast Episode Worth Listening To
To this point, I recently listened to a podcast episode I highly recommend. The Mad Fientist, the host of the Financial Independence Podcast, interviewed Ramit Sethi about the second edition of his book, I Will Teach You To Be Reach.
I have not yet read the second edition, but I did read the first edition a few years ago and wasn’t impressed. I was so caught up in the extreme early retirement world that Ramit’s principle’s of getting the big financial things right, not worrying about little expenditures, and spending lots on the things that matter most to you didn’t resonate at all. Now, however, after listening to this episode – and after my own life experiences with money over time – Ramit’s ideas make a lot more sense to me. Because sometimes I do think about money too much – and in a way that can add stress and take away from my quality of life today.
As Ramit discusses what he doesn’t like about the early retirement movement during this episode, he reminds us we should also live for today.
Ramit believes we all have our preferred money dial – “an area that we naturally love to spend money on.” It’s this area where we should then turn spending up! He identifies the 10 most common money dials:
- Social status
I would probably add food as its own distinct category, and while his post doesn’t define all of these explicitly, it does provide some examples to help you determine yours. While you might find you need to create and/or define your own money dial, using this framework you can:
- Identify what you most love to spend money
- Consider what your bank account shows you most spend money on
- Determine how your current spending may or may not align with your primary money dial
Here we’re talking about what you love to spend money on and not what you feel you have to spend money on. We all have bills!
Ramit even offers a very specific challenge for you: “If you can afford to, take $500 [this week] and spend it extravagantly on something you love.”
Money Mindset – A Challenge
I think it’s valuable for all us to consider our relationship with money – how we feel about it, how it limits us, how it improves our lives vs. adds stress, what our favorite ways to spend it are, etc. What is your money mindset? To help you think through this and gain better clarity for yourself, I encourage you to do the following:
- Listen to Ramit’s podcast episode
- Read his blog post on money dials
- Identify your primary money dial
- Consider how you can begin spending more money in that area to further improve your life
- Bonus: send me an email with your money dial and how you could spend more in that area (and potentially less in other areas)
Because sometimes we really do need to Let Luc, myself included!