A news story circulated online in March.
The article was about coffee — more specifically, it was about a well-known figure in the personal finance world telling readers that spending money on coffee is like throwing away $1 million.
Here’s the link to the full piece if you’re curious. Unsurprisingly, the article got a reaction, with people coming out on both sides of the discussion.
Which is a great thing! We need to have discussions about money. We need to get over this idea that it’s a taboo subject.
So it is in that spirit I’ll say this: I respectfully disagree with the experts on this front. And I promise it’s not just because of my well-documented fondness for coffee.
They have math and numbers to support the position. That’s important. But, in my opinion, they’re missing one important point.
Yes, you can make your money work for you. To some degree, you should make your money work for you — you owe it to your future self.
But that’s not the only purpose of money.
What is the purpose of money?
The purpose of money is to spend it.
Of course, it is important to point out there are responsible and irresponsible ways to do this.
How you choose to spend your money is up to you — and the approach you take will have a big impact on where and when you spend it.
But the purpose does not change: money is currency designed to be exchanged for goods and services.
Why does how you spend your money matter?
How you spend your money is a reflection of what you value. And that is why I can’t get on board with the position taken by two of the three experts in the article.
Declaring coffee a waste assumes everyone values the proposed alternative — investing for the future — the same way.
And that’s just not true.
Again, this is not me dumping on investing for retirement. I think that is incredibly important!
But to suggest you should shuck off all wants and only buy things you need is ridiculous, if you ask me.
It’s OK to have both wants and needs
Thankfully, a third voice is used in the article to bring some balance to the discussion.
I think Ramit Sethi nails it when he points out that the ends don’t justify the means if the means make you miserable:
“One day, when you’re 2,000 years old, you can feel great — who wants to live like that?” he says. “Life isn’t simply about cutting back.”
Again, that’s not an excuse to be irresponsible. Take care of the needs — the bills, the debt, the saving for the future — but know not every single cent of your money needs to be working for you in the traditional sense.
Wants aren’t evil. It’s your money. You can spend it.
Truthfully, I am terrible at this. And if I’m being honest, I think a lot my hesitancy to enjoy my money has to do with the advice doled out by experts. I am slowly starting to come around, to understand that you can be responsible with money and still enjoy your life. It has taken a lot of time to get to this point but I am proud of the progress I’ve made.
So if you’re like me, here’s what I want you to know: you work hard to make money. Take care of your needs — and stop feeling guilty about enjoying the occasional want.
Final Thoughts
It would be remiss of me to not talk about the fact that there are some people who genuinely want to put as much of their money as possible to work.
They value the opportunity to invest for their future over that cup of coffee — and that’s amazing! If that’s what gets you going, then go for it! There’s nothing wrong with that.
But there’s nothing wrong with the alternative, either. Money is made to be spent. How and when you decide to spend your money is up to you. If you’re taking care of your needs, you don’t need to feel guilty about enjoying that cup of coffee or any of your other wants. It is your money.
What’s a recent “want” you indulged in?
“How you spend your money is a reflection of what you value. ”
So true!
I think as long as you are consciously enjoying a coffee and choosing it, there’s no problem with that because it is what you value.
That’s essentially where I have landed on it. I read another really interesting post from Our Next Life yesterday about not letting life pass you by while saving for the future that I felt kind of spoke to this idea, too (here, for reference: https://ournextlife.com/2019/05/20/pass-you-by/). Yeah, getting debt-free and planning ahead matters, but at the end of the day, who knows what that future looks like, you know? I don’t. So I’m gonna enjoy my coffee haha.
I agree of course that the purpose of money is to spend it, but that is not the only purpose of money.
You can, for example, give some of it away. If you do this carelessly though you may give it to someone who will immediately die for overdosing on his favorite drug. Good intentions do not absolve donors from all responsibility for consequences.
You can invest it in ways that provide the capital goods that make labor more productive. In my work life, I had access to the best commercial computers available and a huge manufacturing facility. My productivity would have slight without that support. Now, I keep my capital invested to pass along this benefit, helping some of today’s workers be more productive. This is not charity. It comes from agreements between an employer as to what he is willing to pay and an employee as to what pay makes the job acceptable.
You can bequeath money to selected heirs. Again, (my view is that) you need to verify that your heirs will probably handle the assets responsibly and not hurt themselves with it. Have you read about how many people who come into large amounts of money (sports or entertainment figures or heirs) and go broke within a few years? I don’t at all mind leaving money to heirs. I inherited some of my capital, the smaller part. I have the old fashioned view that the inheritance is not mine to spend, but to conserve for the family and in particular of the next generations. I mean to pass it along with its purchasing power intact. (You cannot make sensible long term plans if you ignore inflation and taxes.) That doesn’t mean that I can’t take some of the yield on that capital for my own purposes as a sort of management fee. I hold myself to no more than 3% a year. With my meager corporate pension, Social Security, and my substantial IRA, I have plenty of income to enjoy coffee with you, but no Ferraris. (Truth in posting: I never supported a wife or children, and never got ruined financially in a divorce. YMMV)
Hi Ted! Really valid points. I particularly liked the point about leaving money to heirs and the idea that inheritance is designed not just to spend as you see fit, but to conserve for future generations. Thanks for sharing!