I’m always proud to tell people that my total monthly expenses today are pretty close to what they were when I got my first real job after college. Some things, like my rent, have gone down, while other things, like my discretionary spending, have gone up. All of this has me convinced that I could take a drastic pay cut without suffering any loss in quality of life, but I’m not sure that’s really true. They say that as income rises, spending rises to match it, after all. Though I track all of my expenses diligently with a budget and can prove on paper that I can get by on less, there’s more to consider: the way I think about money has changed. I thought I would explore the way the spending decisions I make now are different than the decisions I made back then.
1. I can afford, and own, a car: I used to be so happy about being able to get to places outside of walking range without a car that I could gloss over the downsides of taking the bus, like being squished with 110 total strangers into a bus with space for 75, tolerating horribly uncomfortable seats, and enduring unbelievable travel times. Those former inconveniences have now become intolerable to me, especially because I moved 15 miles away from work and am not willing to spend 4 hours a day on the bus (no exaggeration). While I do own one of the least expensive vehicles around in terms of purchase price, insurance, and maintenance, it is still several times more expensive than a monthly bus pass.
2. Returning habits: I used to return anything and everything that didn’t meet my expectations, even if it was only a $2 bottle of juice. Now, the amount of refund I would get has to be worth the amount of time and hassle involved in taking it back to the store. Nowadays, I’m more willing to just let a bad purchase go. However, I still return most things, even items worth less than $10–I just make sure I do it in a way that’s very convenient to me, like writing a company a letter about a defective product and having them mail me a replacement instead of exchanging it at the store.
3. Decreased clothing costs: This one is fairly surprising. Once I upgraded from my studio apartment to a one bedroom and owned enough to feel that getting renter’s insurance was a good idea, I realized just how much money I spent on clothing and that my wardrobe was the most expensive thing I owned even though I rarely spend more than $20 on one article. My clothing costs have dropped drastically since I made that discovery (by more than enough to pay the renter’s insurance premiums, in fact).
4. I no longer limit my lodging options to hostels and friends’ couches when I travel: A few years ago, I saw nothing wrong with sleeping in a co-ed dorm with total strangers, but now that I can afford the extra peace of mind that comes with being able to lock my door at night, I opt for a private room every time. The thing is, I’ve never felt unsafe in any hostel. In my poorer days, was I just letting myself have a false sense of security since I couldn’t afford anything else?
5. I still have a grocery budget, but I no longer buy only the things I need for that week: Now, I buy things that I think are good to have around, even if I don’t have an immediate use for them. This makes impromptu cooking a lot easier, but may not be the wisest choice from a financial standpoint since I still haven’t used any of the balsamic vinegar I bought two months ago. I also no longer weigh my produce to see how much it will cost, nor do I add up my groceries as I put them in my cart, and I’ve increased my grocery spending by about $60 a month. The increased spending was actually a conscious choice, because I love food. Of all the things I could spend my disposable income on, I think it is a wise decision overall to put a small amount of money towards a lot of affordable luxuries instead of blowing much larger amounts of money on fancier clothes or gadgets.
6. I buy soda in cans instead of bottles: A two liter bottle of soda is a much better value than canned soda, but I love the cold can and drinking a soda at the peak of fizziness. The best value of all, of course, would be to give up soda and drink water, but like I said, affordable luxuries are important to me.
7. I donate a smaller percentage of my income overall: This is just an ugly truth. I still have a hard time giving money to something intangible. I have found a few solutions to help me increase my giving, though. I almost always give money to a cause a friend asks me to support, because not only has someone saved me the work of selecting a cause in the first place, but I can show support for a friend at the same time, and supporting a friend is something I can actually observe the effects of immediately and firsthand. Also, when I find a cause that moves me, instead of sticking to my monthly donation budget, I just give whatever amount I feel compelled to give. Kiva also works well for me, because I can give more knowing that I will eventually get that money back. I also try to support small, local causes (like restoring historic buildings) who need the money badly and will have a hard time getting it from non-locals who are not invested in the cause.
8. I’m more likely to buy food at airports I hate, hate, hate spending $10 on one of those tiny pizzas that barely satisfies even my small appetite. But I also hate eating nothing but protein bars and cheese puffs for 8 hours, so now that I have more money, I’ll treat myself to a hot meal at the airport sometimes even though it’s a ripoff.
Many of the changes in my spending habits that have come with increased income are arguably not positive or necessary, but I think one of the reasons we are so likely to spend more as we earn more is not simply because the money is there, but because we need an incentive to keep going to work and making the sacrifices that often some along with a bigger paycheck. If I were making $200,000 a year (which I’m not) and sharing a two bedroom apartment with four people, eating ramen, and walking 3 miles each way to the grocery store, I would have to wonder why I was working so hard for all that extra money. I could tell myself it was for things like early retirement and future travel all I wanted, but I would really need a tangible daily incentive.
A bigger paycheck can equal less stress and more fun, and it’s hard to remember accurately how I really felt when I was making less money, but I really don’t think that the extra money I make now has had a significant effect on my overall happiness, aside from the freedom that comes with not feeling shackled to a specific job/industry/income level. In thinking about doing things that would reduce my income, like going back to school, taking time off from work to travel extensively, or working for a non-profit, I’m making the assumption that the potential increased satisfaction from those activities would be equal to or greater than the satisfaction I currently get from luxuries I would have to give up, like throwing an extra chocolate bar into my grocery basket or staying at a bed and breakfast. I noticed a big difference when my income jumped from poverty wages to a respectable salary, but after that, things haven’t changed much.
So if your income is low, don’t despair–after you’re comfortably meeting your basic needs with a little money left over for fun and savings, the extra money probably won’t make as much difference as you think it will. On the other hand, if you’re thinking about downsizing your paycheck to change directions in life, you can probably swing it more easily than you think you can. I hope that by sharing my thoughts on my income and spending habits, I’ve inspired you to think about your own in a slightly different and helpful way.