During the final few years of my extended graduate student [1] lifestyle, I wondered if I’d ever spend money like a normal person.
House-sharing in my early 40s was still fun. I lived with an old friend – a should-be standup comic – and my picaresque romantic life was heavier on the romance than the ‘life’ part. So I never had to level up my spending on that account either.
My income was good if unspectacular by London standards. It dwarfed my needs.
I was lucky that my job provided global travel and a paid-up social life.
Combine a lifetime of saving [2] with investing mania [3], and any rare splurge on a fancy meal or even a modest holiday felt like scrumping apples from an orchard.
I had growing resources at my back. But I had no desire to deploy them.
Spending money just seemed to create hassle, anyway. A new gadget to learn, or an expensive suit that needed adjusting, taking me back into the sight lines of salesmen.
I had a pet theory that the only sure way to get value from money was to either eat it via a favourite restaurant, or to take a black cab home afterwards. (This being before Uber or even Deliveroo).
Eating out and avoiding the night bus delivered the most bang for my hoarded bucks, not that I did much of either.
Everything else had catches.
What became of the likely lads
I appreciate that to some the notion of a nearly-middle-aged man living with his university friend and relishing a free-range chicken from Waitrose as a treat will seem odd. If not pathetic.
But it is not that strange in the mildly less conventional [4] urban circles I moved in.
For a long time the unusual thing versus my peers was my portfolio, not my living arrangements.
However time did eventually tell. Generations of friends paired-up and left London. (And got divorced, but that’s another story.)
And as Morrissey once sang, the joke that me and my other half on the council tax bill were already a married couple wasn’t quite so funny anymore.
One acquaintance pitched our set-up as Men Behaving Badly meets the IT Crowd.
Another – an ex-girlfriend turned confidant – described me as chrysalis in suspended animation.
I mostly brushed this off, lying on our vast sofa watching The Wire on a Sunday night while they fretted with kids or dreaded work on Monday.
Indeed that sofa was a case in point. My housemate got it from his high-rolling sister. She couldn’t take it with her when she emigrated with her banker husband and kids to South East Asia. We got it ‘on loan’ but it was obvious she’d never want it back.
We marveled that it cost “over £1,000”. My friend almost bragged as much to visitors.
Strangely, they never seemed that amazed.
Soon enough I’d find out why.
Can’t stand me now
You see, the end was near for my long experiment in responsibility-free living.
One day I showed my pal a Help to Buy scheme and this time it grabbed his attention.
I suspect he was getting fed up with our take on The Two Ronnies, or at least becoming more sensitive to the innuendo.
Also, with my financial hat on I’d been boring him for a decade about how he should convert his dependable salary into a mortgage.
Finally he listened.
Six months later I was able to rue my advice at my leisure as I knocked about the house on my own. Having a place to myself did make a nice change. But I didn’t like the rent at all.
I decided to bite the bullet and to buy my own place, too.
My eccentric finances made this non-trivial. But I wangled a mortgage [5] and bought a roomy space that four years on I’m still smitten with.
What a waster
Breaching my fortress balance sheet with a mortgage [6] after a lifetime of no debt [7] upset my equilibrium. I’m still adjusting my investing, for instance, to reflect my changed risk tolerance.
But it was spending money to make my flat into a home that presented the biggest challenge.
As I said, for many years I was fortunate to travel with work. Being in a somewhat trendy industry, we invariably stayed in hip boutique hotels.
I loved them and I wanted my own home to be as nice. I knew this would mean spending money.
But I didn’t. Not to begin with. Perhaps I couldn’t.
At first I slept on a camping mat. Snow piled up against the bi-fold doors.
I didn’t have any curtains.
My then-girlfriend got sick of this pretty quickly, so I bought a mattress [8]. It arrived in a box and I slept like a dream.
Specifically, like someone dreaming of a dining table and perhaps a TV instead of a laptop.
I told myself and others that I was gathering my interior design thoughts. And it was true I now spent my weekends in the shops – places like Habitat and Heals and John Lewis that had previously been about as substantial to me as the facades of a Hollywood set.
The truth was I was reeling from the cost of moving – especially the obliteration of tens of thousands of pounds due to stamp duty – and I needed to regroup.
Don’t look back into the sun
It took a while. But in time I did furnish my place in the style I aspired to be accustomed to. I even splashed out on a wish list item – a coffee machine [9] – that still makes me smile four years on.
Most people come to personal finance blogs to hear how to save [10] and invest.
But from years of the Monevator comments, I know I’m not the only one with a not-spending habit.
So here’s how I learned to actually spend money without ruining my long-term plans.
1. Partition your finances
Unlike my co-blogger, I don’t budget [11]. For most of my life a budget would have been as gripping as a celibate monk chronicling his sex life. I invest almost everything I can, and if I need to spend there’s money left in the current account.
I pay myself first [12], second, and third!
However I do track my net worth and my portfolio (and sub-portfolios) via a real-time spreadsheet.
So I created a new entry for flat furnishing. I detailed all the purchases I could think of, estimated the cost of each, and bumped the total up by 50% as a buffer.
This money was now separately bucketed [13] for doing up my flat.
This got it into my skull that my spending would be contained. I could see my money mostly stayed invested. And because I was outfitting my first home as a 40-something after years of saving rather than straight from university, I was lucky in that the budget was only a small share of my net worth.
2. Spend money slowly
Unfortunately for you – unless you are one of half a dozen people I know who could be reading this – you haven’t been to the most beautiful home in the world.
But I have. I still have daydreams about it.
A relatively modest finca in Spain, it was refurbished and extended by the mother of another of my exes. (See, there are perks to serial heartbreak.)
Besides having an amazing eye for detail – and a bargain – she explained that the secret was to go slowly. To see how you use the space. How the light falls. And so on.
That was all a good excuse to spread out my spending and put up with short-term inconvenience while I decided what to buy for the best.
This gentle pace definitely made it easier to spend compared to bleeding cash every weekend.
3. Spend out of income (including future income)
Another benefit to drawing out my spending was I dipped into my savings less than I’d anticipated. It was more that I redirected new income towards each month’s project.
My saving rate slowed, of course. But that was pretty invisible, and easier for a lifetime saver than seeing my bank balance go south.
(To get a sense of just how deeply my saving habit runs, I once worked out that some of the deposit on my flat originally came from a teenage paper round.)
I also put a lot of spending on a 0% credit card. There was no interest to pay for a couple of years. I ran this into five-figures. That might seem irresponsible but – without wanting to sound like a dick – even four years ago it was only as much as a daily fluctuation in my portfolio.
Before the term was up, I transferred the balance to a new 0% card for a small fee.
Honestly – with inflation running at 7% I’m happy to kick repaying this into the long grass.
4. Amortize everything
I soon learned the reason our old £1,000 sofa didn’t faze anyone is that because even for a very big sofa, a grand is not especially indulgent.
I spent several times that on a leather one with a three-month lead time from an Italian factory.
Buying this sofa did give me pause. I wondered who I’d become. I was not actually running a boutique hotel, after all. This was spending on expenses, not an investment for income.
However it was a very well-made and timeless sofa. I estimated it would last me at least five years and very probably ten. A few years in, my guesstimate is looking good.
Buying a big TV for £700 – even in the Amazon [14] sales – was similarly hard for a lifelong saver.
But spending £140 a year to own a great TV (assuming a five-year lifespan) was palatable.
Again, for most of you this is trivial stuff. For me it was a breakthrough.
5. Consider the Joneses…
I thought of other people and what they owned and spent far more during this period.
Thinking of how certain better-off friends had been through this spending cycle several times – they were onto their fourth home and at least their third sofa – made me appreciate it was normal.
I was still being sensible and frugal-minded, I told myself. I was only now getting to this, and I was mostly buying stuff that would last.
And I have no intention of moving again anytime soon.
Clearly this was a life-phase I had put off. The savings had been banked and compounded, but now it was time to spend.
6. …ignore the Kardashians
All that being said, I was careful whose example I looked to.
In your early years after leaving education, you and your mates are mostly in the same boat. But over time – definitely by your 30s – the divergences emerge.
Some of you are still trying to find your balance at the start of an egg-and-spoon race.
Others are halfway down the track and apparently competing in a different sport altogether.
So I was careful who I compared my spending against. For example I’m pleased a couple of my friends have made several million; I put them out of mind when furnishing my flat.
Obviously I also took no lessons from those who’d always lived well beyond their means.
7. In the long run we’re all dead
I have an old friend with a divergent life and location who I only see once every couple of years.
When we do meet up he never fails to remind me how a few years ago I said we’d probably only see each other another 20 times in our lives.
My friend was shocked by the maths. But I’m very future-orientated and think this way all the time.
Being forward-focused is why compound interest [15] is my North Star, and Buffett’s Folly [16] my downfall.
Everyone comes to understand their mortality sooner or later. Maybe it’s the death of a parent [17]. Maybe it’s the Twitter thread I saw yesterday where someone else ran the numbers [18] just as I do.
Thinking about how I’d waited 20 years to kit out my first home made it easier to get spending. But thinking how long I had left to enjoy it made me think – perhaps for the first time – about what I was really accumulating all this money for, beyond wanting to be financially free [19].
That’s a weighty subject for another day.
But life changes [20]. Don’t put everything off forever.
Up the bracket
Nowadays I find it easier to spend money. Buying and furnishing my flat – helped by the tactics just detailed – seemed to break some kind of spell.
Today I’m more likely to buy something because I want it, rather than only when I need it.
I appreciate that I’m saying this from the privileged position of financial security. But I don’t feel any great shame about that.
I was fortunate to be born fairly smart and to good role models in a safe, capitalist country. But beyond that I’ve earned and saved every penny.
For many years I heard about friends’ swanky holidays, smiled at their new cars, and admired their shoes and handbags. All the time shopping myself for yellow-labelled food at the supermarket and bargain clothes at TK Maxx.
And guess what? I still enjoy a pot of marked-down pesto as much as I used to. I’m no spendthrift.
The difference is that today, if I really want to make some pasta and there are no bargains to hand, I’ve learned how to bite the bullet and just buy it.
Bon appetite!
Have you get on a mental tips or tricks to help with sensible spending? Please share them in the comments below.