(Guest Post by Barbara “Babs” Wagner – who once told us what old people know about money)

One day I was at the mall with my two small sons and we passed a Godiva chocolate store. I don’t know why, but I said “let’s go in and get a treat.” I let each boy look at all the chocolates and choose “just one.” After much deliberation, they each chose and off we went. Good thing I said just one because they’re pricey!

As we were exiting the mall later, we passed one of those giant gumball machines. Predictably, the begging went into overdrive,“PULLLLLEEEEZE Mom, can we have a quarter?” I was already into the retail machine big bucks for the chocolate, so what was another couple of quarters?

On the way home, I asked my boys, “If you could have one Godiva chocolate or a pile of gumballs, which would you choose?” My oldest immediately said “the chocolate” and the youngest chimed in “gumballs!” I’m sure I used that as a springboard to a wonderful teaching moment about choices and values, but I don’t remember. (Who am I kidding? I probably just muttered something about both of them causing cavities. Young parents aren’t always known for their wisdom; we’re just trying not to screw up so badly we turn our offspring into serial killers.)

I remembered that incident this summer, when my now 6-foot young men went shopping for clothes. My youngest hit several sales and scored multiple pairs of pants and a pile of shirts for about a hundred dollars. Of course I was impressed—this kid’s a millionaire in the making and can squeeze the last bit of life out of a dollar and a sale. My oldest settled on a single pair of raw denim jeans for over $150. He wouldn’t tell me the actual price. We’re definitely not $150 jeans folk, and he probably thought I’d be harsh and judgmental about the extravagance of that purchase. Of course I wasn’t! I expressed fascination with the whole concept of raw denim and gave him sincere affirmation for the maturity of this major purchase.

“How fascinating! You say you wear them for months before you wash them? Think how much water you’ll save; they’re both hip and eco-friendly!” (And inside I’m saying, “Stay cool. It’s his money and he can spend it any way he wants. You’re not the shopping police. At least he’s not a serial killer!”)

Seeing their choices that day reminded me that it might be time for that teaching moment. For myself. When you’re trying to be a responsible adult with your finances, it might seem like your choices are all Godiva or gumballs. Do I spend now on the Godiva life or live on gumballs and have the good life in the future? Or maybe cash is tight all the time and your choices are a few gumballs or one gumball. How are we supposed to know what choices to make?

Well, as a responsible adult, I should start by telling you to “run the numbers.”

(These are real numbers by the way; I’ve apparently got too much time on my hands.)

But the numbers don’t really tell the story.  How about intangibles like probability of tooth decay, likelihood your friends will be impressed/disappointed with your choice, and the affect of chocolate or rubber (yep, that’s what gum is made of) on your well-being? And of course, I’d be remiss if I didn’t remind you to take a look at your financial plan and determine which of these is a better fit for your long-range financial goals.  Have you factored in the lifetime cost of toothpaste and appropriate dental insurance for each choice?

So, to review:  evaluate the numbers, weigh the intangibles, and consider this choice in the context of your financial plan.  Which one would you choose? The gumballs or Godiva? HURRY UP!  CHOOSE!

PSYCH!  This kind of pressure is what the logic geeks call a false dichotomy – giving you two choices as if they were the only ones.  Gumballs or Godiva.  Saving or spending.  I tell you this not because I wish to show off my logic geekness, but because you should watch out for friends, experts, old people or anyone who tells you that you have to choose and it’s one or the other.  And it should really set off all your alarms when someone says you should choose something in particular (its usually what they’re selling).

Here’s why:

THERE’S ALWAYS MORE THAN TWO CHOICES!  For instance, why not some of each?  How about none of each?  I hear a lot of folks living on gumballs and hating it, because they think their choices are spend or save, but not both.  Likewise, the road to hell is paved with Godiva and credit card debt.  Both choices are just begging for trouble.  The answer might be to save most of the time, but let loose now and then.  It might be to give most of your money to charity every month and be happy in your poverty.  Don’t let anyone, especially you, make things so black and white that you hate your choices.  Now, I know I previously told you every choice is actually two choices, but I lied.  Old people do that some times.  In reality you have tons of choices, so deal with it.

IT’S ONLY A GOOD CHOICE IF YOU LIKE IT.  Remember my sons?  Cheap son would hate having only one pair of jeans.  Fashionista son can’t stand wearing cheap clothes.  They are thrilled with their choices.  But what if I told Fashionista, “get a grip son, you’re a poor college student, and you shouldn’t be buying this crazy stuff when you have student loans to pay off.”  What if he listened to me and hated those lousy jeans from Target every single day of his miserable college student life?  (I’ve got nothing against Target jeans, but my son really hates them.)  What if someone told you, “get a grip, you’ve got a financial plan and it doesn’t include date night with your significant other, treats for your kids, or a smartphone.”  How long are you willing to live without things you love?  Make choices you can really live with, because you’ll have to.  

THE MOST IMPORTANT INTANGIBLE IS YOUR VALUES.  OK, here’s where I actually have something important to say.  The real “Godiva life” comes from knowing yourself, being clear about your values, and making choices that are in synch with your values.  Forget the numbers, forget the plans, just figure out what you want to do with your life.  Then spend/save/give away your money a little everyday till you have the life you seek.  You don’t have to be logical and smart with your money all the time, but if you want to be a contented and genuine human, you have to act on your values every day.

For my family, one of our critical values is to live within our means.  So the truth is, I’m really proud of both my sons, who paid cash (their own) for their purchases.

Me, I’m all about the peanut M&Ms.  Which I wash down with Dom Perignon. (Or Diet Coke)

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Barbara “Babs” Wagner is a former poster child for financial misadventure, who learned most of what she knows the hard way. She has a degree in business and has studied personal finance, most of which she now ignores. Her mission is to poke fun at conventional wisdom, keep money subservient to her values, and inspire others to learn from her mistakes. You can frequently find her at Goodwill, hunting for the perfect art to go with her Ethan Allen furniture.

(Photo by hill.josh)