Overspend vs. Underspend part 1

There’s a lot of talk about how to live as frugally as possible – how to avoid spending money at all costs and to have a super high savings rate. It can even lead to neurosis meaning you can’t even enjoy a pint with some mates.

But is the illusion of control actually worth it? When it comes to spending we can of course overspend but what about underspending?

Then again, this is the run up to Christmas and it’s easy to blow your budget (if you set one) and we seem to like spending money. Spending can’t be all bad? But how do you balance between too much and too little and is there a middle ground to tread on?

Recently the Savings Ninja wrote a great post about how he’s allergic to spending money and it really got me thinking.

You know, I feel like that sometimes and over the years I’ve learned to control my money spending impulses and to say “no” to spending, avoid high cost activities and hobbies and more importantly disassociate myself from that type of thing. I’m not the sort of person who drives a fancy car and the cars I own (and how I drive them) are cheap. I always not only think of the cheapest way to do something but anyone who isn’t as cheap as me is just up to the old “conspicuous consumption” by borrowing money they don’t have to buy things that they don’t need to impress people who don’t matter.

So far, so orthodox. It’s like a mantra of the FI community. Any heretics will be cast out from our midst!

But is getting over-zealous about spending money just a case of trying to take too much control over small things that we can control? There’s a pattern of behaviour for anorexics who find that controlling what they eat they have the feeling of control over their lives. If what you are after is Financial Independence and you achieve it but can’t enjoy a coffee in a café on your retirement without nearly choking on your buyers remorse that you’ve just spent €1.20 when you could have stayed at home and saved that money. It’s no way to live your life!

Don’t sweat the small stuff

I find one of the biggest indicators of human behaviour is how people react to anything that is “free”. The word free is used so much in marketing, advertisement and in all aspects of our life. Workplace perks can often be considered as “free coffee” even if it’s part of the package. Facebook is “free” but that’s another thing altogether – how much would you need to be paid to give up Facebook for good?

Have you ever been at a party where there is a free bar? It could have been at a wedding or maybe a work do (beware of getting drunk and telling your boss just what you really think about her!) Chances are you drank more than you would have if it was just a pay bar. “Free” can make us to all sorts of funny things – like when in town, driving around for ages looking for a “free” parking space – valuing your time (and fuel) as a disposable commodity. I’ve been there and done that. Spending money on a car park may seem not so frugal but if it saves you time and makes your life better – isn’t it a trade-off and not just a rip-off?

I am not sure if (once you are) FI, that still penny pinching and avoiding spending and abusing any free offer you get is truly Financial Independence. If money still controls you then you can’t genuinely say that you are independent of it. In Your Money or Your Life (website link) they talk about “Financial Independence is the experience of having enough — and then some”.

The secret should surely be to avoid the bad habits that lead to spending too much (laziness, poor planning, boredom), avoid the behaviours that are harmful (smoking, showing off, flying lessons) and learn what to control what you do spend money on (plan, research, buy carefully).

Living a life sworn to poverty, chastity and obedience to a budget fit for a Jesuit is not likely to really make you that happy long term – unless you want to become a monk. And if you were a monk, wouldn’t you really want to be like St. Bernardus instead? Image result for st. bernardus

The Happy Medium

Image result for fulfillment vs. money curve

The below chart is taken from the Life Hacker but it features in a range of different texts on personal finance, economics and psychology. Basically it says that up to a point spending more makes you feel good but up to a point only. Beyond the apex any extra cost doesn’t bring any more joy. The phrase “trappings of wealth” springs to mind – if you buy a big house you then get trapped with the cost of heating it, council tax, furnishing & filling it with junk and so on.

Image result for micawber annual incomeWhere you start on the curve is probably more to do with your upbringing and family wealth than anything else. If you were brought up with modest means and fair parents, you’ll always be looking up the curve – thinking that more money = happiness. That’s how I was and still am.

If you were privileged growing up you might have a different experience but once you are older and start paying for life yourself – there difference between what your expectations are for life and what you can actually afford.

The cross-section between what you want, and what you can afford can easily either make you render you miserable or happy. Someone who rightly can afford happiness but still lives in misery is a miser. Who wants to be a miser? The AA does great things for alcoholics but the members tend to be missing something inside them – joy maybe.


So I’d like to think that Financial Independence is a state of mind as well as finance. It means using money as a tool to live a happy life and knowing how to control it and not be fooled by it. If that means paying too much for a social drink in London then so be it – it’s not the same as buying strangers bottles of champagne in nightclubs to impress them.

Pick and choose what will make you most happy in life – it’s the little things that give the most pleasure and you shouldn’t sacrifice your own happiness.

Thanks, GFF






  1. What a fantastic post!
    I was quite taken aback by SavingsNinja’s ‘allergic to spending’ post and really put into perspective for me how important it is to not let the pursuit of FI completely overrun my life to the point I feel bad about buying my morning coffee when I can definitely afford it within my budget and am still able to maintain a decent savings rate.
    I find the upbringing thing quite interesting. I can see clear evidence of some wealthier friends trying to live up to their parent’s lifestyle when they’re only just beginning their careers on lower salaries. My concern is when they move out and have to maintain this spending.

    Liked by 1 person

    1. thinking about it – being cheap isn’t a choice it’s a psychological affliction!
      I am getting better at it but I’ve been a real tight arse over the years but it’s got to be akin to anorexia but for money.


  2. I fully agree with this: “In Your Money or Your Life (website link) they talk about “Financial Independence is the experience of having enough — and then some”

    Most of my fire calculations are focusing on my expenditure now + 20% for that extra breathing space. It’s an interesting topic to see ‘how much is enough’ type scenario (not in the nest egg that you save in total but more about how much monthly income you need when you are FIRE). I’d rather be safe in FIRE with that extra 20% than have to live down to the knuckle on my current expenses. But hey, that’s just my 2 pence!

    Liked by 1 person

  3. I totally get it on how difficult it is to spread money. It’s part of what helps people build a lot of wealth. But it can also be debilitating as well.

    I’ve decided to revenge spend for the rest of the year and push my budget higher. The YOLO Economy is here to stay and I’ll happily partake!



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