How to waste money

Every month my sister sends me angry abuse over WhatsApp – although happily it’s not directed at me:

“Look at these idiots! Their stupid smug faces. What will they do in there every night? Binge watch GoggleBox while drinking cans of Stella in the fifth bedroom and then get lost looking for the third bathroom.”

Strong stuff, considering the object of her ire is invariably just whatever average-looking couple won this month’s dream property in the Omaze house lottery.

But my sister isn’t a misanthrope. Having a mock moan about the lucky winners is part of a ritual for her.

Cathartic I suppose. Maybe it’s partly what she pays Omaze £10 a month for.

Grand designs

After a year of these texts I took the bait and signed up to the same raffle myself.

Not to grump, mind you. I don’t need any excuses for that. 

Why then?

I suspect it was to give myself permission to daydream as materialistically as any Kardashian, albeit only for 15 minutes rather than for half-a-dozen TV series.

Omaze’s £3-5m properties are not so much out of my league as from another sport: one of those bling-y affairs with ‘World Series’ in the title.

And truthfully, even if I did have the money to buy an Omaze property for myself – so a net worth of £10m or more, by my reckoning – I don’t think I would.

There’s the running costs, the alienation of my friends. I’d rather have more investing money to play with.

So it’s more likely that a cute Kardashian with a crush is going to stalk me for six months than that I’d ever inhabit a ‘stunning six-bedroom country estate with its own luxury spa, wine cellar, and stables’.

But I do like nice things and I love nice homes.

And for £10 a month I get to be somebody different for a moment.

I’m not in it to win it

You might be shocked to hear that your supposedly financially astute friend on the Internet does something as dumb as playing a lottery.

But I mostly think it’s £10 well spent.

Besides the enjoyment factor, I suspect it’s a pressure valve that releases a bit of steam from my always being so returns-orientated with almost all my money for the last 30 years.

“Why not just look at the photos of each month’s prize home and save yourself £120 a year?”

Because I’m not stupid. Of course there’s statistically almost no chance of me winning. But the odds aren’t zero. And that makes all the difference.

“Buy a national lottery ticket instead. The odds are better and you can live wherever you like if you win!”

That’s very rational of you. And I’d agree if I was trying to maximise the expected value of my £10-a-month payment in financial terms.

But I’m not, because the expected value is nearly zero whether I play the lottery or do the house gamble.

If I was being sensible, I’d probably put the £10 a month into buying more Premium Bonds.

Even there though, the expected return on every incremental £10 is still near-zero. Only as the extra cash piled up over the years to tilt the odds on my total Premium Bond pot would I be having my cake (the chance of winning a million) and eating it (prizes won with average luck equating to a decent interest rate).

But that’s already more thought than I want to put into this silly £10 a month I throw away.

I just want to gawp at the ‘rustic fire-pit where you will gather your friends for long conversations overlooking the sea’ and dream.

Spendy and still thrifty

Everyone has a few things like this. They don’t make sense but they are fine to do anyway.

Writers as diverse as Ramit Sethi who will famously Teach You To Be Rich and Ermine over at Simple Living in Somerset are both totally okay with you spending some money on things that bring you joy.

For Sethi, penny-pinching is pointless. What matters is to find a way to support and live the life you love, rather than sleepwalking into a default mode of living.

Sethi is mostly against home ownership at today’s prices, for example. But supposing nothing brings you more pleasure than great tailoring? Then he has no problem with you spending thousands on a made-to-measure suit.

Ermine calls this living intentionally. He’s vastly more frugal than Sethi. Even so, I suspect he has a garage full of electronic gizmos that 95% of us would consider a total waste of time and money. And Mrs Ermine grows her own vegetables that would probably cost a fraction of the price in the shops.

More power to them! These are things that bring them joy and the relatively modest – and, crucially, easily afforded – cost doesn’t matter.

Save the money elsewhere.

Car-less and carefree

So much of the angrier disputes in the personal finance space come down to clashes that look like arguments about money but are really just squabbles about taste.

Even the almost irreproachable Mr Money Mustache is, to my mind, a little too harsh about driving what he calls too-big and too-expensive clown cars.

Don’t get me wrong! I have zero desire to spend any money on a clown car myself.

I’ve never owned even a normal car, and when I once worked out how much this had saved me – living in London, where life is fine without a car – and what those savings were worth compounded via my active investing, the number was so outlandishly high that I thought I’d see more readers rage-quit Monevator over it than Brexit.

However for many people – the cliché being men around my age – a dream car is something they’d willingly forego a thousand restaurant meals to own.

Now this is where I’m supposed to cite the sticker price of a truly expensive and obscure luxury vehicle.

But honestly I have no idea.

Is a Skoda Esprit a thing? What about an Aston Martian?

Romantic interlude: the French connection

The only time I recall ever wishing I owned a car was when I was 22 and doing badly at romance.

Still to develop the awesome armoury of lady-killing prowess that I can bring to bear today (note: my exes’ recollections may vary) I’d spent weeks trying to attract the interest of a disinterested French girl in a murky watering hole in a yet-to-gentrify Kings Cross.

We often ran into each other, thanks to our shared love of obscure indie bands. She even bought a copy of my fanzine!

And then one night she was actually with me at the bar, laughing – truly – at my jokes about Sartre, and furrowing her brow at my oh-so-insightful comments about the fusion of grunge and proto-BritPop.

So funny, she laughed, putting a hand on my shoulder.

Had I heard about the after-party in Hackney?

Obviously I hadn’t. But I mumbled something non-committal.

Cool, so did I have a car?

In those long ago pre-Uber days, getting in and out of still-dodgy Hackney was best done in a helicopter if you were a young French women living her best life in the capital.

But alas, I didn’t have a car.

A flicker of something on her face, and later she smiled at me not unkindly as she left with an up-and-coming journalist we both knew.

“He’s got a car!” she whispered with a wink over her shoulder.

Car parked

So yeah, there was that. And considering the episode still lives rent-free in my head after nearly 30 years, maybe I can’t truly say not owning a car has been 100% profitable.

But on the other hand, well, everything you’re thinking about a relationship built on wheels…

Plus of course I’ve got my bigger financial freedom fund at my back thanks to living a car-free life.

So no, I didn’t need to spend a cumulative six-figures over the years on cars.

Spending stereotypes at dawn

Besides, if I had chauffeured that French belle to somewhere off the Tube map that evening, then my life might have turned out completely differently.

Which would mean I might not have met my lovely girlfriend of today!

Although…while I’d be immeasurably poorer in uncountable ways if such an unthinkable outcome had occurred – okay, yes, she recently subscribed to Monevator – at least it would have saved us some friction over money.

You see my girlfriend, S., likes to buy clothes.

Fair enough, except she doesn’t seem to wear them very much.

I don’t mean she’s a nudist – although she is more curious about those beaches than I am.

Rather that I’m regularly sent photos of new outfits being tried on – or I’ll see them on her social media – but by her own admission most of these purchases are lucky to get an outing once a year.

Dressing down

To me, buying clothes not to wear them is ridiculous. If the sunshine holds, then this afternoon I’ll be heading out in my favourite multi-pocketed shorts that I’ve been wearing every week in summer for most of the past half-decade.

And let’s not even get into the environmental consequences of wanton clothes purchasing. (Here I fully agree with Mr Money Mustache on the ecological costs of clown car proliferation, too.)

But wait! I’m seeing her to-me-wasteful spending through my own lens of what matters.

I’m not looking at some £100 dress – unworn so far – through all the phases of the joy it’s bringing…

…the hunting, the rejecting, the anticipation, the looking at herself in the mirror and being happy with what she sees. The whimsical thoughts about when she might wear the dress and how it’ll make her feel.

S. is a bit younger than me. Long-time readers will know I think young people are already rich. A nice white shirt and well-fitted jeans and I think she’s a knockout. The rest would look better to me in her ISA.

But so what? This isn’t about me. There’s more in her ISA already than for many her age. And despite fairly modest earnings (by London standards) she’s also got no debt and even helps out her parents with their mortgage.

Who am I too judge an extra few dresses a year?

What’s more, for her part S. believes I put too much weight on my living space.

I book nicer hotel rooms than I need to – and I’m far more precious about my flat, which I mildly splurged out on to recreate the vibe of an upscale boutique hotel.

A hotel that S. would never pay a premium to stay in herself.

So who’s right?

Neither of us, of course. It’s pointless arguing about this stuff, so long as the major financial bases are being covered.

Nobody is right or wrong when it comes to how you waste money.

At the margin

I could conclude with a few academic studies that look at how best to spend your money.

Draw practical conclusions from research papers like To Do Or To Have or Spending Money on Others Promotes Happiness – or books such as The New Science of Smarter Spending.

But I called this post How To Waste Money for a reason. If I wanted to riff on How To Maximise The Impact Of Every Marginal Fifty Pence You Spend then I’d have done so. (Or more likely gone for a walk).

My point is I believe it’s totally okay to waste a bit of money now and then, provided you’re solvent and investing wisely.

Just be sure to waste money on things that are still – however silly – worth it to you.

Then save most of the rest.

Don’t sweat the small stuff

I guess this whole article might seem irresponsible to some people in the personal finance sphere.

But I write it in the certain knowledge that – like me – most Monevator readers are far more likely to suffer from Buffett’s Folly than from going crazy on the horses.

To my mind I’ve never been one for stinting on every penny, or for over-indexing on the latte factor.

But ‘to my mind’ is doing a lot of heavy lifting there.

The truth is I still rejoice at buying bargains with yellow stickers in my local M&S, despite my FIRE status.

And I’ve never had to budget, because I hugely underspend quite naturally.

Since my 20s I’ve always ‘paid myself first’ by putting a chunk of all I earn into savings and investments.

Indeed if I have any actionable financial advice to share today then it’s to automate your savings. Then you don’t have to sweat the lattes when it comes to spending whatever is left each month.

But you almost certainly do that already. And we’re in the minority.

How many would-be house raffle entrants do you think would write 2,000 words to justify a £10 flutter?

Answers on a postcard – although a postage stamp would suffice. The number is vanishingly small.

The luxury of losing a little

To conclude on a more downbeat note to show I haven’t suffered some kind of brain event in arguing for all this frivolity – a quick tale from my gym.

I’ve got to know one of the cleaners there quite well over the years.

The other day I came across her in the cafe with a bunch of lottery tickets spread out over the table. There must have been at least a dozen. She was checking them off manually against the results on her phone.

My first instinct was to tell her she should buy her tickets online so the checking is done automatically. No risk of missing out that way.

But after five decades I’ve finally learned to occasionally keep my mouth shut.

This was clearly part of her ritual. Going through the numbers with a pen and imagining with every new entry that it could be her.

So far, so similar to my Omaze-ing £10-a-month stupidity.

The difference, clearly, is what our little bets represented versus our respective financial situation.

If she buys this many tickets every week, then that must eat up a meaningful percentage of her disposable income.

Maybe even of her net worth, I don’t know.

I guess if she was a family member or close friend I would have lectured her. But it wasn’t my place, and instead I learned something.

“You have to try to win to make things different, don’t you?” she said in her heavy accent with a smile. “You have to hope and dream.”

I’m effectively an opt-in-only runner in the rat race. She’s not going to join me by saving and buying a tracker fund with – what – £50 a month? Not at her age anyway.

Maybe those lottery tickets are worth a lot more to her than to me after all.