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Economist: Pleasure Principle
People work hard for their money, but they don’t make their money work hard for them. It’s time to fix that. Economist whips your income into shape with smart, practical advice.
Phew, 2008 is gone. It’s been a wild ride and 2009 looks no calmer. Many people are reining in their spending in light of the troubling economy. In bullish times, people get swept up in carefree spending. What’s a car, a condo, and a trip to Cuba when interest rates are low and the value of houses and stocks are climbing? Now, in bearish times, purchases need to be more carefully reasoned.
The first step is becoming more efficient in how you use your money. We’ve always said this column was to make your money work harder for you: now’s the time to give lazy money the boot. A spending check-up will help diagnose potential problems down the line. It may take a few hours to complete, but it’s worth the effort.
Ideally, people should spend their money only on things that have meaning to them. Whether your passion is being awesome at Rock Band, owning every Jason Statham film on DVD, or raising the prettiest geckos in the land, the largest chunk of disposable income should go to that which makes you happiest. You must love what you buy. Practically, the principle can be broken down into three criteria: how much it costs, how much pleasure it’ll provide, and how long it’ll be enjoyed for.
Cost is an obvious factor: the more you spend on one item, the less you have remaining for everything else in the pot. A record of what you’re spending money on illuminates overspending in any areas. Second, the pleasure you get typically stems from evaluating how important the stuff you’re purchasing is to you. Consider how many impulse buys end up like children’s toys, fussed over for a few minutes but in the end abandoned. Finally, how long you spend with your purchases is enlightening, too. With too few hours in each day, even things bought with the best of intentions can remain unused. (When was the last time you strummed a few chords on that guitar?)
Our version of the spending check-up is a simple table with four columns. Write what you’ve bought recently in the first column. Get as specific as possible. The next three columns are the price you paid for the item, how much you love the item (on a scale of 1 to 5), and the number of hours you were amused by it. It’ll become clear pretty quickly which purchases can be cut. (You spent how much last month on Doritos?!)
Filling out the check-up can be informal, just as long as you follow through with it! For us, we felt some of our purchases were justified (we’ve watched the Wonderfalls DVDs ad nauseum); others, less so (like that unopened season 1 DVD set of Lost, though it is kinda useful: it keeps our other DVDs from falling over). The best purchase was a french press, which gets used twice or thrice daily (cost: $15). The money saved from heading to coffee shops goes towards really expensive beans. The worst purchase was an easel from our painting phase (cost: $30) that hasn’t been touched since last summer. It’s all good, however, since it’s been re-purposed into a drying rack for laundry.
The great sin of consumerism isn’t that people shop, but that they shop indiscriminately. 2009 may end up gloomy, but savvy folks will see this as an opportunity to reboot their spending habits. We’ll be eschewing fancy electronics and designer bags for what really matters: BlogTO’s list of the best poutine in the city. It’ll cost less, give When Harry Met Sally levels of pleasure, and leave us talking about it for days to come. Now that’s time and money well spent.