I found this article to be fascinating. It's basically the psychology of why and how we spend money. It's a long article, so I will just focus on the highlights. What drew me in was the beginning:
Former General Electric CEO Jack Welch once nearly died of a heart attack. Years later he was asked what went through his mind while he was being rushed to the hospital in what could have been his last moments alive.
“Damn it, I didn’t spend enough money,” was Welch’s response.
The interviewer, Stuart Varney, was puzzled, and asked why in the world that would go through his mind.
“We all are products of our background,” Welch said. “I didn’t have two nickels to rub together [when I was young], so I’m relatively cheap. I always bought cheap wine.”
After the heart attack Welch said he “swore to God I’d never buy a bottle of wine for less than a hundred dollars. That was absolutely one of the takeaways from that experience.”
“Is that it?” Varney asks, stunned.
“That’s about it,” says Welch.
How interesting is that? One of the first key points is that your family background and past experiences heavily influences your spending preferences. A quote by Robert Quillen in 1927 states, "The more you were snubbed while poor, the more you enjoy displaying your wealth." The article states that, "A disproportionate share of those with the biggest homes, the fastest cards, and the shiniest jewelry grew up snubbed in some way. The value for them is in healing a social wound."
Another take away from the article: Rather than using money to build a life, some people choose a life built around money. An example of this would be the Vanderbilt family, who gave in to extreme excess.
For me, the most relatable idea was: A lifetime of good savings habits can't be transitioned to a spending phase. Financial advisors noted that this is common in retirement, where a person becomes fearful of spending the money that they have. I feel as though I've always had this habit. I hate knowing that I could have bought the same item for a better price and will perseverate on a purchase like that for days. It's not a mentally healthy way to exist, but it's hard to let go of the 'waste not, want not' mind set.
Another take away: "Spending money is a way of performing for others." Many people subconsciously buy in order to show that they've made it and are looking for respect from others. And those 'others' are actually only thinking about themselves.
The question is, "Whose opinion are you trying to influence, why, and are those people even paying attention?"
There was nothing about hoarding, but I see that with my own mother, who grew up quite poor, that she spent a lot of money on things she didn't need in her later years and just stockpiled it. It must have given her some sort of security to have 'extras' after growing up without.
Does this article resonate with you? Do you have any example in your own life regarding your relationship with money?
Found this article fascinating! I think I had read something years ago that was very similar about why and how we spend money, and how it stems from our upbringing.
ReplyDeleteI'm very much like my father. I don't spend what I don't have. And I'm frugal. I like a deal and will wait until I find one. Example, I refuse to spend a lot of money for a smartphone. It's a phone for gods sake, not a lung or a kidney. LOL!
I live a rather simple life and don't require a lot of "stuff" to live. In fact, I can't stand excess of any kind and will give stuff away if I start accumulating things I don't need because I don't like waste. I get a lot of FREE gratis (products) from my line of work. And more than half of it I give to my friends because I would rather them use it than it just sitting there in boxes.
The one thing I do get angst about is paying my bills on time. My father was that way too. I'm fanatical about not being late. I usually pay them before they're due.
I do have a savings account, which I try not to touch unless I need it for something unexpected.
I'm far from being a financial wizard, but I think I'm good at adjusting to the ebb and flow of money.
FAB post, my friend! X
It’s always interesting to me to contemplate why we behave in certain ways. I’m very much like you and have never been late with a bill or spent more than I had. I’ve never understood why people have credit card debt, as I’ve always paid my balance in full. I even repaid my college loan before I graduated, but that was when credit hour costs were very low and a student could get by if they worked a lot of hours for minimum wage.
DeleteI love that you give your freebies away. I also hate the idea of waste, so even if I have a tea I don’t like, I will give it to a friend who might enjoy it rather than throwing it away.
I wonder if our shared appreciation for customer service stems from the value we place in that being part of what we pay for a product? Hope you have a good week, Ron.
"Spending money is a way of performing for others." Now that's something I've never thought about before. I know that when I spend money it's for a definite purpose, I'm frugal by nurture and by nature. I can honestly say that as an adult I've never bought something to impress other people nor do I think of myself as performing when I do spend money. But some people think of spending as a performance? Gotta think on that idea.
ReplyDeleteI think the performance concept comes into play a lot on social media. Think of all the fancy vacations people post about on Facebook and Instagram. They are not posting photos of their stay at the Best Western in Findlay, Ohio.🤣 Though that might be something you and I blog about!
DeleteBut years before the internet, I did notice people who performed. It would be those who couldn’t wait to tell you what designer purse they bought, etc. Basically, any braggart.
I'll have to read it later (I've bookmarked it), but I've always jokingly said, "Life's too short for cheap beer." Since I can take or leave wine, to Welch, I'd say, "I can't imagine having enough that I'd pay a $100 a bottle for wine, maybe for a good bottle of Scotch or Bourbon, but not wine." Different folks, different strokes.
ReplyDeleteI didn’t necessarily think he was literally talking about wine, but that he wished he’d have spent his money instead of just accumulating it. However, I do think we all spend our money on what we value. My husband spends a lot on fitness equipment, but won’t spend money on a nice car.
DeleteThis is interesting. I'm frugal. I didn't grow up wanting for much, but my folks were very budget conscious. I wore my older, shorter sisters' hand-me-downs and it drove me crazy especially because I was so much taller. That may have influenced my insistence in making sure my kids have a decent inventory of clothes to wear - clothes that FIT. Flooded pants drive me crazy. I do love to find a good deal. Sale racks beckon me. The concept of people purchasing things to perform for others sort of makes sense, I guess. I couldn't bring myself to spend a $100 on a bottle of wine.
ReplyDeleteIt also bothers me to see flood pants because it reminds me of the days my mom wouldn't buy me new pants when I'd outgrown them. I think we often parent as a reaction to how we were parented, so what you said makes total sense to me. We are oenophiles here, but I don't think we've ever purchased a $100 bottle of wine. I'm not certain I could tell the difference between that and a $50 bottle. I'd need to taste them side by side.
DeleteGreat thought provoking post Bijoux!! I think I've always had a pretty healthy relationship with money. I don't spend what I do not have and carry no debt other than our home which is a fixed rate mortgage. I do believe in spending a bit extra for quality but because it usually lasts longer not because I've ever tried to impress anyone. I grew up in a pretty typical middle class family in the 70's with the values of that decade so I think I've just continued on with that way of doing things when it comes to money.
ReplyDeleteIt sounds like we are very similar in our spending styles. There are some things that I buy that are less quality (eg., I don't buy name brand garbage bags) because I don't place a value on it. My husband and I both value experiences over material goods, so we are much more likely to book an expensive hotel room than we are to buy designer clothing.
DeleteI struggled financially for many years. Overdraft fees were a regular occurrence, as were interest-only payments on high credit card debt, and scrimping just to get by. This all culminated in the short sale of my townhouse in 2014. So, the fact that I am now able to buy a really nice house without worrying about money - not to mention a near-perfect credit score - are sources of sheer pride. I haven't necessarily changed my spending habits, as I never felt I was reckless to begin with, but nowadays I don't lie awake at night worrying about paying bills. That to me is the ultimate success.
ReplyDeleteI think when someone struggles like you did, you now appreciate not having to worry about finances. It would be terrible to lie awake and worry about bills. I’m glad you’ve gotten out of the hole and found financial success!
DeleteMy parents were always thrifty as they never had a lot of money and were very careful how they spent it. Jenny and I were thrifty for many years because of heavy commitments like mortgages. Now we're mortgage-free and have plenty of money but we're still a bit thrifty and always look for bargains and discounts. We still think twice about spending large sums of money on anything, even though we can afford to splash out a bit. There's no way we would spend $100 (£81) on a bottle of wine. If we spend £8 ($10) that seems a bit extravagant!
ReplyDeleteAs I’ve said in other comments, it’s interesting what we value and decide to spend our money on. My husband and I value good, healthy food, so we are more likely to spend money on that over a material possession.
DeleteThis is interesting because my friend and I were just discussing a similar question on Sunday. She was talking about how she has a scarcity mindset when it comes to spending money because she grew up relatively poor. She claims she now buys in bulk because she is always afraid of running out.
ReplyDeleteEvery one of us, I believe, has an unhealthy relationship with money. Nobody on the planet was ever taught how to have a positive relationship with money. We are not educated about it; it is assumed that we know how to manage it. It mystifies me why it is so taboo to discuss money when it is so essential to our lives.
Excellent post, my friend. See, this is one of those posts where I wish we could all sit around a table and talk about it!
It is such an interesting topic and reminds me of the book that was popular years ago called The Millionaire Next Door. The people with the most money (with the exception of billionaires) are usually the ones you wouldn’t guess have money.
DeleteMy mom also bought in bulk and still would if she could drive to Sam’s Club. I threw out an expired 10 pound bag of almonds that I found in her pantry recently. She lives alone and it’s just plain disturbing to me.
It’s definitely a taboo subject and it’s sad that basic financing is not a high school requirement.
Interesting post, and you are right money really is a taboo subject and one I find really hard to write about. As the old saying goes you can't take it with you when you die. My problem is I can't tell the difference between a posh bottle of wine and a cheap one, so it's wasted on me.
ReplyDeleteIt is weird when you think about how it’s seen as shameful to be rich OR poor. Middle class is seen as the only respectable way to be. Hope you had fun in the sun!
DeleteI'd rather spend the money today than regret it on my death bed, and since we cannot predict the future, I'll keep working and spending until a can do nothing but sit at home.
DeleteI definitely want to spend money on trips before I can’t hike, etc. anymore.
DeleteWe weren't exactly poor when I grew up but my Dad was a roofer and my mom was a SAHM to us 4 kids, so we had what we needed but not much more. I think when I started earning my own money I was quite a spendthrift but as the years went by I got more and more frugal! It was a necessity being a SAHM to my own 2 kids. Now I can squeeze a nickel into a whole bottle of juice if I need to! I'm just thankful I can be (semi) retired and still live comfortably.
ReplyDeleteI think living on a single income does make you be more careful with spending.
DeleteJust recently, I read a piece in an AARP magazine that stated people were thrifty because they were raised that way and when they have the means to spend in later years, they defer, sometimes until it's too late if you know what I mean. That said, my upbringing was not one in which we went without as my late father was a self-employed electrician and my late mother did not work after her marriage. Most dinners were home cooked with vegetables from my parent's garden and we never took vacations to places many families do these days. That said, I never felt deprived in any way because there was never any reason. My husband was raised similarly.
ReplyDeleteNow that we are retired and have the means to travel and purchase things, we're thrifty based on that upbringing. While we have traveled more than our parents and will spend money on "things" many are weighed against a mental checklist; sometimes a purchase is put off until later since it's "not really needed" at least not now. Just because we may have the means now, it doesn't mean we are careless with $. Thrift stores are a favorite shopping excursion as often older things are way better than new.
It’s eye opening when you clean out a loved one’s home. When we did my husband’s aunt’s apartment, we found expensive perfumes and other gift items that she had never opened or used. It was sad, but a lot in that generation seemed to live like that.
DeleteThat said, I don’t think you can go wrong with being a little conservative with your spending habits.
I don't spend a lot of money on things I don't actually need. When I do need something new I look for the good deals before buying it.
ReplyDeletePlus, you get a lot of freebies!
DeleteI need to do a better job of budgeting because I was really spoiled when Mrs. Shife owned her own business and did pretty well. That isn't the case anymore because she sold the business but I still spend like we are back in those days.
ReplyDeleteIt’s hard to put spending in reverse. Retirement is looming for us, so we will be in that boat before we know it.
DeleteI grew up dirt poor and tend not to spend money on things that I don't need. I try to look for the best deal possible when I do have to buy something. I do splurge on nicer quality things that will last me a long time, not because I'm trying to impress someone, but I look at it as saving money down the line. A nice handbag that will last me years as opposed to a cheap one that I'll have to keep replacing every year. A newer car that will get me from job to job without having to dump money into repairs, quality appliances that will last. Things like that.
ReplyDeleteBut, I read a new article the other day and the headline was something along the lines of "Millionaire spent through most of his winnings before he died." I was supposed to be a bash to the winner, but I thought "Good for that guy! He enjoyed spending his millions while he was alive. He wasn't going to take it with him so I'm glad he had the money to burn through instead of hoarding it for someone else to burn through after he died."
I’m glad the millionaire enjoyed his winnings while he could. Although after taxes, he probably didn’t have as much money as people would like to think 🤣
DeleteSo interesting! I have a hard time spending money. I was conditioned to save and not buy anything unless it was on sale. When I find I've bought something that was cheaper elsewhere--yep, that bugs me. I've tried to learn to let that sort of thing go faster. I think I've succeeded. Mostly. :) Great post, Bijoux. Such interesting perspectives. The human brain is WEIRD! :P ~Betsy
ReplyDeleteYou’ve described my mindset as well. It really bugs me to realize I could have paid less. I’m actually glad we no longer get the newspaper so that I don’t clip coupons anymore. I’d get so mad at myself for forgetting to use a coupon I had at home. Weight lifted!
DeleteThen you're going to love this story. I needed peanut butter, but not TOO desperately. It wasn't on sale. I debated. Do I wait or get it now? I grabbed it. Then the older gentleman, deliberating his flavor choice, handed me an extra coupon he had for $3 off Jif. I was just going to buy the generic, but with the coupon, the Jif was suddenly "on sale" because it was cheaper than the generic. So kind of him. At check out, all was done, and I asked the cashier if he remembered my coupon. He had not. So he had to refund me the pb, then check it out again with the coupon. It was $3!! Totally worth it. :P
DeleteWow! So nice of that man to hand you the coupon! And I’m so glad you asked about the coupon before you left the store. Ugh!
DeleteNow I know to hand the cashier the coupon at the end not the beginning.
DeleteI always thought that was the way to go.
DeleteI can't say the article resonates with me. I grew up pretty poor, rarely had store bought clothes. I still buy things on sale the bulk of the time and both hubby and I use things up. We don't buy new clothes alot, we don't buy new cars every few years. In fact my current car was bought used after trading in my 14 year old car. We live in a very small house, 1 bath, 1 car garage. The only thing we do that people might say hum you spend alot on is we do like a nice bottle of wine and good meal, and we like to travel. We live frugally at home, the only ones on our street not to add on or remodel the small house; but we spend money on travel...experiences. Interesting food for thought.
ReplyDeleteSandy's Space
The older I get, the more I realize how important experiences are over material goods. Have a nice week, Sandy.
DeleteWhat an interesting article and I can't imagine spending $100 on wine even if I had the money to do so. *giggle giggle*
ReplyDeleteI grew up fairly poor and my husband comes from a very modest home; we're fortunate to have done very well in business, but would never in a million years buy something to impress others. We really do enjoy spending money (and time) on our friends and family; we take great pleasure in sharing. That being said, I am the more conservative one out of both of us and he has to convince me when he thinks we need to make a large investment in something. I remember my meager days very clearly, but don't remember ever being snubbed for my stance in life.
You are the first person who brought up the ‘snubbing’ that was mentioned in the article. I do recall a few times being made fun of for wearing flood pants or not having the latest clothing. Thank goodness this was long before devices! I lived in a very diverse community and was definitely in the lower end of neighborhoods and income. But we were never hungry, so it’s all relative, isn’t it? Have a super Suzy week!
DeleteSome years ago, I was deep in credit card debt, so I took the Dave Ramsey course, threw away all my credit cards, and switched over to a basically cash economy. My finances have never been so healthy in my life as they are right now. The biggest thing I took away from the course (aside from a hatred of debt) was his idea that we accumulate wealth in order to be generous to others. It has been a joy to be able to help our kids get on their feet - helping with expenses when they were out of work, buying inexpensive cars for them to get to work, lending them money for their kids' school, etc, etc. Ten years ago, I couldn't have done those things.
ReplyDeleteIf somebody just dropped a million dollars in my lap, I think the first thing I'd do would be to rebuild my very idiosyncratic house (much of which was cobbled together piecewise) the way it 'should have' been built. I might travel some, but I'd still want to save as much of it as I could. . .
I’ve always heard positive things about the Ramsey course. I’ve just never understood how one reserves a hotel room or rents a car without a credit card?
DeleteEarly in our marriage, we put away money for our kids’ college and never regretted it. My kids never understood why I’d say things like we can’t afford to get a pizza every Friday night or why we didn’t buy them iPods, video game systems, etc. when they clearly knew my husband made good money. They realized it when they went to college and saw their friends buried in student loans. We are now putting away money for our grandkids.
Debit cards will do the trick, but since they draw directly from your account, you never spend money you don't have. . .
DeleteOh, I didn’t know you could use a debit card for reservations. We don’t do debit cards because of the security risk, but that’s good to know.
DeleteWhat an interesting article! I find that there is a real binary, when people grow up with very little money. Sometimes they spend, spend, spend, and then sometimes - like, in the case of my MIL - they just can't. They can't justify buying the nicer thing or spending the extra fifty cents on organic produce. That said, I do know people who feel the need to impress when they do make extra money. There seems to be little middle ground!
ReplyDeleteIt is interesting how people react to their childhood circumstances. And I feel like social media has exponentially multiplied the people who feel the need to impress. Thanks for stopping by!
DeleteInteresting topic! When first married we weren’t in great shape financially. It was 8/9 yrs. later we bought our house. Still here. Ron’s semi-retired now and we have to be mindful of money, but we have his small pension, an IRA, and some savings. Will it be enough if we live long? Possibly not, but we want to enjoy a few things now. A good bit of our extra spending is probably on food/drinks…groceries, ordering in, more recently going out again…but could budget all that if we had to. Our home is 97 yrs. old and could use some upgrades, but for now we don’t want to give up some of our smaller splurges to redo a room. So we’ll paint, buy carpet/appliances, etc. but have yet to remodel the whole kitchen. The same cabinets the original owner had in 1926, we’re still using, with quite a few coats of paint on them. We wouldn’t let the roof fall off though. LOL Just saying that some things aren’t as much a priority for us as they might be to others. In a way, our parents were probably similar. They had pension, savings, etc. and enjoyed certain splurges. I've still got boxes of yarn/instruction books from his mom's crochet obsession. ;)
ReplyDeleteAs for a $100 bottle of wine... I'd never do it!! Ron recently bought a $100 bottle of bourbon though. It was only because we'd had drinks at our fav cocktail bar and it was one of the brands they use there so when he saw it at a liquor store, he treated himself. Let's not talk about what some of my craft store purchases might have added up to over the years, ok!? haha
Great post!!
~Mary
We waited four years to buy our first home and I remember how stressed we were because I was a new SAHM and we used all our savings for the down payment. I had no idea your home is almost a century home! Wow! I bet it has some neat features. Yeah, you just have to prioritize function over design sometimes. Bourbon can be so pricey! We were in Louisville last summer and I was shocked at the prices of things like Angel’s Envy. We aren’t bourbon drinkers, so I had no idea!
DeleteThis part resonated with me, “Your family background and past experiences heavily influences your spending preferences.”
ReplyDeleteBut it was more in the opposite way, and I wish the article would have delved into that.
My parents are extremely financially irresponsible. For example, my sister and I paid their rent this month, when we were little we thought the power and water being turned off was how you knew it was time to pay the bill, and we used to compete to see who could find the returned bad checks on the walls in grocery stores and restaurants first. I probably dated myself with that one! We’ve both made some financial mistakes, but we’ve gotten much better as we’ve gotten older, and we’re both obsessed with using budgeting apps and/or notebooks, paying bills early, and being very open with our spouse/partner about money. I think a lot of that is compensating for how we grew up.
There was also never any consistency. My dad would get paid, and it was all going out to eat and shopping, then that paycheck would run out long before the next one came, and it was digging through couch cushions to look for change to buy cheap groceries, and then the cycle would repeat with the next paycheck. My yearly salary is basically divided by 12, so my paychecks are always the same amount, and I love that level of consistency. I’m paid once a month, and I’m always much more reluctant to spend anything in the first 2-3 weeks, which I think probably ties back to the spend like mad on payday and scrape by later that I grew up with.
Oh my goodness, Danielle! What a way to live. I'm so sorry you went through that in your childhood and it absolutely affects your adulthood spending habits. It sounds like you've overcome a lot, which is really something to be proud of. Thanks for stopping by and commenting.
DeleteI just like buying stuff, haaahaha xoxo
ReplyDeleteMe too, especially if it's at TJMaxx!
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