Is it Always Bad to Spend Money?

When it comes to frugal living, many people try to avoid spending any money at all. Frugal living requires planning, and for many that means planning how to cut as much spending as possible from the budget, maximizing every opportunity to save.

But is that the right approach? Is it always a bad thing to spend money, even if it’s just a want and not a need?

Some Things Are Worth Spending Money On

No matter what you think of frugal living, the truth is that some things are worth spending money on. Spending money on these things doesn't mean that you aren't frugal, or that you are doing something wrong. What's important is that your spending is based on value.

In the case of buying something that is high in quality, spending more is obvious. If you don't want to be constantly buying something over and over again as it breaks, you need to pay extra for something of high quality. In such cases, it's not about the cheapest thing; it's about the best value.

Sometimes figuring out what makes sense means calculating the total cost over time. Spending a little more now can be worth it if it means that you will save in the long run. Spending more now doesn’t always mean you will save though.

My friend is really into fashion, and she can tell you that part of the reason why a Hermes Birkin Bag costs $40,000 is that each bag is hand-stitched by the same craftsman, and can be traced back to him for repair if anything goes wrong through normal usage. She’s also showed me the craftsmanship of every detail of the bag, telling me how each stitched is basically exactly the same as the last. It’s true - the bag is incredibly well put together. Still, a $40,000 bag costs as much as a very decent car.

I think you can tell that I think a $40,000 handbag isn’t the best use of your money. Still, it could be worth it to my friend if she truly loves one and can afford the expense. She has one and has been using it off and on for over ten years. She’s happy every time she takes it out to look at it. She’s even happy when she takes it out to clean it. She worked hard, saved up for the frivolous expense, and bought it when she was much younger. She’s proud of the fact that she was able to buy one back when she was in her early twenties, and also claims that she’s worked harder to make money as a result because she wants to be able to afford these luxuries in the future.

Sometimes, what you spend money on is worth it because it's important to you. Sometimes, spending money on things that you enjoy, or enhance your quality of life is worth it. The key, though, is to make sure that you really feel as though the expenditure will improve your life, or help you in some way. Don’t give in just because it seems that everyone else thinks it’s good. Value is very personal.

I play video games as a way to de-stress and temporarily forget about everything that’s on my never-ending to-do list. And because of the amount of time I spend on the devices, it makes sense that I spend a bit more than the average Joe on this hobby. On the other hand, some of my friends don’t really game at all wants to buy that PS5 just because it seems like it’s sold out everywhere. That purchase wouldn’t make sense for them even though it would be the talk of the town if they were able to snag one from the thousands and thousands of people who are trying to fight for whatever stock the retailers have in the coming months.

My wife, on the other hand, loves to travel. It wouldn’t make sense for her to spend that much money on buying expensive trinkets to display in the home, even though she would be happy to have them. Instead, she should probably save up for a vacation and go as often as her schedule and wallet allow.

Some things are worth spending money on, but you want to make sure you will truly value them. Spending money on the stuff that's just "okay" doesn't make sense in the long run. You need to decide what you really enjoy, and what you want your life to look like. Set your financial goals, and your life goals, and then plan your spending around what will help you reach those goals. Whether it's finding an extra $200 a month to pay off the mortgage earlier, or setting aside money to take the whole family on a great vacation, it’s important that the reason why you are saving is meaningful to you.

Bottom Line

So yes, some things are worth spending money on. It doesn't mean that you have the license to rack up debt and live beyond your means to get them all though. Even if what you want to buy is very important to you, it’s critical that you prioritize. Living within your means is still the number one goal. This means taking care that you have your present and future accounted for. After all, it’s your financial well being that’s ultimately going to provide the most value to you. That means that even if you love trying out new restaurants, you need to contribute to your emergency fund before you go out to eat. And before you even think about buying a $40,000 handbag, you need to make sure you feed your retirement account via contributions. You may want to get that new swing set for the kids, but you must save up for it rather than put it on your credit card.

No, it's not always bad to spend money. It can enhance your enjoyment of life. What’s worse is if you buy it without having the funds to pay for the purchase. You should have the money available when you spend it. When you don’t have money and you spend, then it’s always bad. Don’t make that mistake.