What’s worse than watching your friends spend money on crap they don’t need? I’ll tell you… It’s hearing them afterwards try to convince you why their purchases were actually good choices!
My buddy recently bought a brand new Audi A4. Very sleek and sexy car. And while I’m really stoked for him and want him to enjoy the finer things in life, his reasons for the purchase didn’t quite make sense to me… His logic was:
- “Tax advantages” Basically, his tax guy told him that buying more expensive things could lower his taxable income. Since he can deduct car expenses against his income because of his work situation, he was advised that a more expensive car made better sense than buying a cheaper car. 😱
- “Higher resale value” My friend bought the $10k upgrade package (leather seats, fancy interior stuff) because he says the car will have a higher resale value later when he wants to sell it. 🤔Huh??!!
- “It’s worth it because I drive a lot” He spends a lot of time in the car, commuting for work. And since he doesn’t like driving, he thinks having a nicer car will make it a little less miserable vs. a modest car. 🙄
I don’t mean to judge … People can spend their money on whatever they want to in life. But justifying a luxury or impulse purchase with “it is a good investment” makes me cringe a little. Especially if it’s the complete opposite of common financial sense!
Other Money Excuses We Tell Ourselves to Justify Purchases
We probably all do it in some way or form. We mix up our wants with needs, and rationalize the poor decisions we make. Here’s a list of things I see pretty often (and admittedly, sometimes I think these myself!)
- “It’s a tax deduction!” While a tax deduction could be a great benefit of buying something, it should never be the primary reason to make a purchase. Paying a lot, just to save a little, doesn’t make financial sense.
- “I just got a tax refund check! So it’s basically free anyway!” Getting a tax refund just means you overpaid taxes throughout the year.l It’s not free money from the government! Thankfully, I’m hearing this reason for impulse purchases less and less. Glad to know people are educating themselves more about taxes! :)
- “I bought it because I’ve always wanted one” A friend-of-a-friend of mine just bought a brand new $700 surfboard… He’s never been surfing before in his life, and never really even talked about it. His reason for buying the new board was “My whole life I’ve always wanted to try surfing!”… And while that’s a great attitude (and I love seeing people try new hobbies!), he could probably rent a board for $10/hr to see if he enjoys it first. Heck, he could have even borrowed one of my boards for FREE and I’ll take him out for a few lessons, too. There’s no great reason to spend large amounts of cash on new hobbies that you might not end up liking.
- “Gotta experience this while I’m young. YOLO!” I hear this excuse a lot when people buy spontaneous and expensive vacations. Don’t get me wrong, traveling while young is good — you can’t wait until you’re an 80y/o to go backpacking across Papua New Guinea — but there’s a TON of travel you can enjoy at any age! And less expensive travel can be just as enjoyable as expensive trips! It’s the experience that counts, and that can’t just be bought.
- “Everyone else has one. So I had to buy one too!” I’m sure you’ve heard this quote before, but it’s always worth repeating…
“Stop buying stuff you don’t need, with money you don’t have, to impress people you don’t even like”. (Who said this first by the way? Suze Orman?)
- “My old one was dirty, and they’re so cheap to replace … so I just bought a new one” I’ll admit, I used to have a mindset like this. If my coffee maker was looking old and dirty, I’d just buy a new one and ditch the old one. It wasn’t until I met my wife that I really learned to reduce waste and save money!
- My “rich friend” said it was a good investment: I hear this money excuse a lot when investors make sudden large purchases of risky stocks, cryptocurrency, or get-rich-quick opportunities. For me, I’m very cautious of who I take investing advice from — no matter how good their financial situation is. Whenever I hear this I’m reminded of a quote from my fav personal finance book, The Millionaire Next Door:
“Would a business, especially a very productive one, ever hire a key employee without doing a serious background check and an in-depth interview? No! Yet most people, even those with high incomes, hire financial advisors after obtaining little or no background information about these “employment candidates.”
“Operate your household like a productive business. The best businesses hire the best people. They also patronize the best suppliers. Utilizing the best human resources and top suppliers are two major reasons the most productive organizations succeed while others fail.”
- “There were only a few left – so I had to buy it quickly!” The power of internet marketing continues to amaze me. If it’s a fast selling and good product, they will probably make more of them. Well-thought-out purchases usually trump speedy ones, regardless of how many items are left in stock.
- “I’m saving money in X category, so I can afford to waste a bit more on Y” I love it when people celebrate good budgeting and reward themselves for good habits!… But, it becomes a slippery slope when they start overspending extra money in discretionary categories. Excess spending can creep up and become bad spending habits!
- “The stock market is roaring so I can loosen my spending belt a bit” I know a lot of people who live this way. They spend a lot in the good times, then when the money stops rolling in they have a miserable time adjusting back downwards. Also, most stock market gains are unrealized. Beware of false profits $$!
- “This gadget will help me be more productive at work. Saving time = saving money!” While there are definitely some tools to help make your time more efficient, in my experience, more productivity happens when you have less stuff – not more 🙂
- “I’m getting a big bonus next month, so I can spend the money now” I heard this excuse a lot in my old sales career. Some of my colleagues would go out and blow their commission checks on fancy watches, electronics and stuff before the money was even paid to them! Sometimes sales would fall through, checks never came and they were stuck in credit card debt debt. :( If money is not in your bank account, don’t spend it yet!
- “I’ve already blown my budget, so who cares anyway. I’ll try harder next month/year.” This budgeting excuse is a funny one, because it’s like giving yourself a reward for bad behavior. Admittedly, I fall into this trap a lot … For example, around September of this year my wife and I exhausted our entire alcohol budget for 2020. Instead of stopping spending for the rest of the year, we just continued, knowing that our budget was blown anyway. In hindsight, we should have had a different attitude!
- “I can always return it if I don’t like it – so it’s like a free trial!” The whole point of return policies is to get products you love into your hands. But the likelihood of returning those things that you love is very small. “Free trials” are not a great reason to purchase things you don’t need.
- It was on sale! Stumbling across a killer deal is always exciting. But buying something you don’t need puts you further away from your financial goal, no matter how good the discount is.
Spending money in itself is not a bad thing… We are all free to budget for whatever we want in life. Spending should be FUN!
That being said, I want to encourage people to be intentional with every purchase – both needs and wants. Enjoyment doesn’t increase proportionally as spending increases, so when you do spend, enjoy it for the right reasons. :)
What bad excuses to spend money or weird justifications do you hear often? Caught yourself saying any of these?
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I love this article because I feel like so many people use these excuses as a way to justify their spending habits. And in reality, it’s just that – an excuse to spend money.
The best advice I’ve ever received was before you make excuses, make sure you do your research. Figure out if the truth behind the excuse.
Like you said – spending should be intentional.
Great article – and great advice as always!
The Millennial Money Woman
Sometimes the truth behind the excuse is you just really really really want something. That’s fine (sometimes), but admitting that is hard for a lot of folks :)
In 2001 I got a music performance degree using the horn my parents bought me when I was in high school. I kept that thing for twenty years and then plonked down seven grand in 2016 for a new Austrian-made horn. It much better suits how my playing style and performance opportunities had evolved in the intervening decades. I’m by no means a professional — tally up my gig earnings in all that time and it’d amount to maybe half the price of that horn — but pre-covid I spent 10-15 hours a week in rehearsals and concerts with amateur groups. And I STILL sometimes stress a bit over that purchase.
MMM published a post years ago about how spending on something new and shiny was in fact trading a fraction of your security in exchange for something to which you’re now beholden — it requires its own space in your home and your brain — and to always question whether it’s worth that space. That really resonated with me. I haven’t gone all Walden (“Simplify, simplify, simplify!”) but the perspective helps keep me saner, happier, and wealthier.
Thanks for sharing about the horn. Don’t stress – those should be good memories, not bad ones :) Doesn’t matter how good or bad you are – you’re doing what you enjoy doing!
In the words of Benjamin Franklin: “He that is good for making excuses is seldom good for anything else.” While that may be a little harsh, it does hold some truth. If you can always justify your actions through excuses, then can you ever be accountable?
Anyway, back on subject, an excuse I hear often is “It’s only $XX per month, so I can afford that.” Often times there are additional fees/interest built into these monthly installments that the buyers aren’t aware of, causing them to overpay in the long run. Or worse, it taunts them into purchasing something they couldn’t otherwise afford outright. Unfortunately many companies are to blame with their marketing tactics.
Cheers to a great weekend!
Oooh, that’s a good excuse. Yes, I hear that one a lot too. Subscriptions and payment plans can be a silent killer! If you don’t think it’s a good deal buying it outright, then it’s probably not a great deal buying it over time with payments :)
Paraphrase: “If it’s not good enough to buy outright, it’s not good enough to buy over time.”
I’m putting that one on a tiny sticky note in my wallet! (mostly so I can remember to tell that to salespeople that want to hassle me about financing everything)
You would LOVE this interview. I don’t know if you follow Graham Stephen…but this is the latest interview he did: https://www.youtube.com/watch?v=bTecHenYWqA. The “kid” he interviewed (even though he makes 2,000,000 a year) only pays $800/month in rent, can’t afford Starbucks (his words), and pays cash for everything because credit makes him nervous.
Wow. I don’t even know what to say. I think a lot of people are scared of the stock market, or credit cards, because they have been burned in the past. I definitely align more with Graham’s long term outlook and perspective on building true wealth! Thanks for sharing Angie!
Brilliant lead graph! I have the same problem in that I observe how everyone around me spends their money and say – “Why would you do that?!” It’s very difficult to do this and not be labeled judgmental. It’s a fine line for sure. But then the famous quote of – “People have money for what they want to have money for” – couldn’t be more true.
For example, I know people in their 40s and older who make a six-figure salary and have never made one payment on their student loans. At that point they have made a conscious choice not to pay their debt in order to maintain a certain lifestyle. I live in a condominium complex and I watch all my neighbors go out and buy new cars (not new “used” cars) every 2-3 years. Once again, I ask why. Some people’s behavior with money is astonishing to me but it all comes back to financial literacy.
Keep up the great work. Happy holidays.
It’s a fine line for sure. I try my best not to judge, although sometimes it slips out. I guess I just want them to fully understand the consequences of decisions.
That tax deduction/advantage really puzzles me. Just do some math, Geesh! I’ve never heard the tax refund makes it free excuse but that is funny.
And the spending in anticipation of the bonus! Lol. Oh this list is entertaining.
My favorite that I’ve heard a lot is “I deserve it”.
When someone has an unhealthy relationship with money, it’s easy to come up with excuses. Doesn’t matter the tax bracket.
The “I deserve it” might be a true statement sometimes… But definitely not all the time. :)
I get roped into some travel rewards offers from time to time and justify my purchase by subtracting that way. I’m only human!
And I am a little guilty on the car front. True to small extent for safety purposes, but I definitely could have gotten by with something cheaper.
The first step is to admit the problem… great list!
Yeah, realizing the problem is half the battle. Love the credit card hacking to pay for things. I’ve definitely used that excuse in the past to spend money… “Honey, let’s go to Vegas because we have a free hotel night to use”! (we end up blowing $400 in food/entertainment :)).
Have a great week IF!
Omg, that tax deduction makes my skin crawl. Spending a dollar to save $0.25 in taxes is never a good plan. Sure, take all the deductions you’re entitled to, but don’t intentionally spend money because it’s deductible.
It is even more true now for non-business owners. The standard deduction is so high now that almost no one even itemizes. So, you’re spending a dollar and not even saving any money on taxes.
Great article, thanks for sharing!
Haha yes I heard a friend bragging the other day about how he’s gonna claim xyz and he keeps receipts etc. Turns out it’s better to just claim the standard deduction.
The one argument that can convince me is that I drive a lot so it’s worth it. If I spend a few hours each day in my car then maybe it can be a nicer.
I can see why that’s a factor for sure.