Instead of buying new clips for a rubber bumper that was falling off Moose for $25, I decided to buy some super glue at the convenience store instead. I’ve had a fascination with super glue ever since I accidentally glued my thumb and middle finger together in the 6th grade. I remember telling everyone that I was in meditation pose so they’d leave me alone. Didn’t happen.
While at the convenience store, I had to choose between a stick of brand name Krazy Glue for $4.99, or a six-pack of generic super glue for just $3. Six times as much for $1.99 less! What a steal! Of course I decided on the six-pack and away I went to not only super glue my loose bumper, but also my rear taillight, and my friends broken sunglasses! I was a super glue machine and went through two sticks in two seconds.
NO MATTER HOW MUCH I MAKE I WILL NOT CHANGE
No matter how much passive income I make from investing, I know that I will always refuse to go to the car dealer and spend $25 for clips that cost maybe $2 dollars to produce. Besides the bad feeling of getting ripped off, I was happy to save ~$23 after tax with the super glue solution.
I grew up in a frugal household where we always ordered water with a lemon during meals and used things until they could absolutely no longer work. This frugal upbringing made it easy to save 55% or more of my after-tax income ever since graduation, even when I was only making about $50,000 a year living in ridiculously expensive New York City. I enjoyed living in a studio with a roommate after college. It was like a luxury dorm room, baby!
One of my silly dreams is to one day bypass flying commercial and have my own private jet. I’ve been traumatized enough by crying babies and middle seats next to the toilet that flying commercial is one thing I dread the most. The fear of dying in a plane crash has now become secondary to the fear of being kept up all night on a trans-Pacific flight! Does anybody want to invest in Samurai Airlines, where we will have a babies only section and extra large middle seats with guaranteed both arm rests?
Of course I will never be able to afford my own private plane, but what I can now afford is the occasional business class as a compromise. There is an unsaid rule that business and first class cabins are to be void of noise pollution. However, I just can’t get myself to pay 3-5X the price of a ticket, no matter how cozy the seats and quiet the cabins are! $1,500 vs. $350 to go to Hawaii for a 5 hour flight? Forget about it!
IS OVERCONSUMPTION A DISEASE?
I get complaint after complaint from readers on Financial Samurai why they can’t save. Worse yet, I get complaint after complaint from people who can’t stop spending, and don’t have the wherewithal to pay down their debt. If you can’t save, at least don’t dig yourself in a big hole with outrageous consumer debt that’s almost always on a credit card!
It’s been a struggle for me to understand why some people don’t want to shore up their personal finances. I’ve written articles such as “Are The Top 1% Better Than The 99% At Taking Care Of A Family“, and “Do “C” Students Deserve “A” Lifestyles?” to try and understand why things are the way they are. I’ve made progress into the psychology of wealthy, but every time I feel my readers and I have taken a step forward, there’s always several steps back towards confusion.
Perhaps what I’m failing to realize is that everybody’s upbringing is different. If you’re raised in a household that loves to spend more than they make, then perhaps you too will be influenced by your parent’s wanton spending habits. Just like how I have a very hard time spending more, others may very well have a hard time spending less because of the hardwiring!
So I have to ask you all, “Are spending habits impossible to change?” If you were raised by frugal parents, will you generally alway be frugal if you become rich? If you were raised by debt-laden, spendaholic parents, are you doomed to be looser with your finances than normal?
Is labeling our problems as a “disease” or as part of our DNA just another excuse? Or is it a reality in many cases?
Regards,
Sam
I was raised by a parent that loved to spend (she still does) and I have little doubt that it formed much of my early financial behaviors. Having gone through what I’ve gone through though I do think it’s possible to change spending patterns.
I used to spend without regard for how much I made and how much debt I was going into. I’ve sat front row at Rascall Flatts, Kenny Chesney, Tim McGraw and have sat close in a few other concerts. I had years where I never cooked at home and ate out on a consistent basis.
After going through a difficult period I finally woke up and eventually developed a new “frugal” normal. I can’t speak for everyone but I think the majority of Americans have to learn the hard way and “be scared straight.” For many this will come later in life once they realize they haven’t saved enough for retirement. For some, hopefully they can wake up and be scared earlier.
While I think spending patterns do have a correlation with how you were raised, I think it has more to do with our society, personal values, and the friends you hang out with.
There definitely is a truth to getting SCARED STRAIGHT. Life is so easy in America with abundant food, free education, and no bombs flying overhead. Anybody who comes close to dying……….. things change.
How much are front row tickets to those concerts?
Oh…$700 to $1000 after buying them through a 3rd party. Of course I wasn’t smart enough to get them through the ticket box office when they first went on sale.
WOW, $700-$1,000 EACH? That is a lot of money. The frugal me would just throw a potluck at my house and turn up their latest CD. :)
My parents aren’t the best savers in the world, but I’d say they’re better than the average family. They definitely subscribe to the ‘make more before you save more’ philosophy.
I would say that my siblings and I are pretty solid savers and investors, but we definitely have a different style than our parents. I like to think that I set all the benchmarks (I’m the oldest) for them to try to beat or follow… but who knows? Maybe we all figured out our styles independently.
I’m going to say that it’s silly to blame your poor spending habits on DNA. Think about it – if you watch your parents struggle when you grow up, you should have even more incentive to do things a different way, not less.
Or you may feel that there’s no way out, and you are predestined to have poor spending habits and never accumulate wealth?
I didn’t grow up with frugal parents, they loved to spend money. The problem with that was we never had money to spend so I was brought up using things until they completely fell apart (and couldn’t be fixed) as you did. Ordering water at dinner when we DID eat out was also the norm. These things have bled into my life and earlier on, because I was not taught as a child, I developed a spending problem that I have finally overcome. I think how we are raised really sets the theme of our lives and what we will be great at.
My parents do tend be spenders and I didn’t really see that until a year or two ago. I thought it was the way to live. I really thought if you weren’t spending and not worrying about money then you were just a miserable miser. Now I know that’s not true at all and in fact, those “misers” are now much more comfortable than I am! But I don’t think you can say that how your parents are is how you will be. My older sister has never had any credit card debt, she graduated from college without debt and only two times has she financed a car (both at 0% interest and paid off in 2 years or less). She’s been great about saving from the very beginning. So I really have no excuse except that I’m the youngest child and we “youngests” tend to get a little more spoiled and assume the world revolves around us. You can grow up frugal even when you’re surrounded by spendthrifts and vice versa. Eventually, you figure out what your habits are and what you want them to be: then it’s just a matter of making the changes to get to where you want to be!
My family was poor when I was growing up and part of it was bad choices. I had no real knowledge of a “savings” account or what it entailed as we were living day to day for the most part. Unfortunatly, I continued this trend for part of my adult life. But I think spending/saving habits can change. I’ve been changing mine for the past 6 months and feel so much better for it. I love the feeling of having positively changed. However, my brother (I’m the eldest and he’s the middle child) makes more money than I do and has for a while. However, he still doesn’t know what good saving habits are. He spends everything he makes and is under the impression that it is okay. I’m hopeful that he will eventually change his ways the same way that I have.
Great job changing our spending habits! I wouldn’t worry about your brother. Do what I do and think everything is rational. He does not save b/c he loves to work. The things he buys gives him more pleasure than having less of a safety net in the future. All is good.
I don’t think they are impossible but I think a major trigger must occur to dramatically change them, whether it’s an eye opening debt, a loss of a job, or something that makes you see how things could be improved. Most who just wake up and say ‘today I’m going to start spending less’ will not. Just like all the weight loss pledges at the beginning of the year. Most don’t stick to those unless there’s a true trigger that makes you stick, such as a health care or something like that.
Great question, Sam. I don’t think there is a simple rule that applies to everyone. I’m not a psychologist, but I would imagine there is something to do with birth order. For example, my two brothers and I were raised in the middle class, by parents who never went crazy with spending, but weren’t the best at prioritizing their investments (my mom invested in a pyramid scheme and lost all of her money – which, now that I think of it, may make a great post idea). Anyways, both of my brothers adjusted to adulthood thinking they could continue these spending habits (without having the income of my parents yet because they were just entering their careers) and almost had to file bankruptcy because of consumer debt. This was never a problem for me. I’d like to contribute it to my hard work and determination, but honestly it is probably partially from seeing their failures. They have since changed their spending habits (which suggests to me that it isn’t hardwired), but I have seen others that just can change and repeatedly over-spend. I guess that is a long response to say it is complicated.
Sounds complicated indeed. Seeing failure from immediate surroundings is very motivating…. I don’t want to go down in flames as well, and try and learn from others.
Spending habits are possible to change; for that matter any habits can be changed. One only needs a crisis that brings on the determination and persistence we need. I also believe that this ‘upbringing’ thing is rather over-rated – we can never predict whether parental example will be followed or rejected. In my case it was rejected – my grandmother was frugal to extreme and my Dad moderately so. I grew up to object to frugality with passion – I still do in moderation.
Nothing is impossible. My brother sometimes brags about how much he saves when he travels to various place. And it’s quite impressive what he has done in the savings department but what good is it when you over spend on other things like a car or clothing?
Hopefully your bro is enjoying his fruits of his labor then, with some good chunk of savings accumulated.
I don’t think they are impossible to change but if your environment is rooting against you then it’s definitely an uphill battle. The change has to be made from a lifestyle or cultural perspective and we all know that change can be soo uncomfortable sometimes – that it never happens. It’s easier to complain and rationalize sometimes. Yes it’s tough and possibly scary (or even viewed as substandard) to live within your means. It’s that fear that keeps people trap in perpetual financial disdain. I think I answered your question but to recap: yes it is possible but hard on lots of levels for some.
I believe that parents’ spending habits absolutely influence those of their children. These habits could be alterred with a conscience effort, but I don’t think that the emotional aspect could be changed. You either feel guilty about spending money or you don’t.
I was raised by a single mother who worked full-time and went to nursing school at night. Because she worked so hard, spending money on frivolous things was simply not an option.
Even though I make substantially more than she did at my age, her spending habits have stuck with me. It comes down to the basic question – is the item/service worth more to me than my hard work? Often, the answer is no. I take it a step further and deposit the same amount I thought about spending into my savings account. I have the mentality that if I can spend it, I can save it.
Single mom’s are some of society’s most admired people in my mind. Their ability to do it all is amazing.
You’re right, if I had your mom, and saw her work all day and night, I would not spend a dime. In fact, I would work harder like no other to make sure I make it enough to take care of her so she never has to work that hard again.
I am definitely someone who feels exactly the same way. Well said!
Spending habits absolutely change — and I know I’ll have to trick myself (automatic contributions to investments, savings, etc) so that I don’t fall victim to inflating my spending along with my income.
My spending habits changed after I blew through over $100k cash in just over 2 years. My parents were not great with their money, and I latched on to that style of handling money. My epiphany moment came when my brother-in-law dropped a Dave Ramsey audio book in my lap. I popped it in and listened to it day after day on my morning commute until finished. From that point forward, I have never viewed finances the same. I don’t think anyone is “doomed” by their upbringing to always have bad spending habits. I think people buy into a fatalist mindset because they want to blame someone or something else for their poor financial choices. People can/do change. That’s why I’m in the PF blogging field, because I think that managing money is a learned skill that can be honed. That’s why my motto is “Just because you make money, doesn’t mean you know what to do with it!”
$100,000 is big bucks! I guess it depends on what you spent it on? If it was for a downpayment on a house, not so bad yeah?
The good thing about spending $100K cash is that you HAVE $100K cash! How many people have that?
Unfortunately, I blew it on not working (rent, food, more food, eating out, clothing, and other consumables). The only productive thing I did with it was pay off half my college tuition (…..to an Art school…..and pulled out a student loan for the rest…….DOH!). To think of what I could have done if I knew then what I know now…….I would definitely be much further along in my financial goals. Oh well, can’t get the money back, so I just need to create a few more income streams to make that much money again :)
At least you know what it feels like to have $100,000 right? And if you liked the feeling, you’ll do your best to make it back!
Did you save that money slowly over the years, or did you receive it quickly without much of your own effort? This is a topic of my post coming up on Financial Samurai.
Thanks
I inherited the money from two different sources. I received $25,000 at age 18 and 21 from an annuity my mother set up, and $70,000 at age 18 from breaking my neck. Having no training whatsoever in how to manage my daily finances, let alone an inheritance, I went the lazy route and decided to not work for a few years. I blew it all, and then some. I received more money at age 23 and 25, but was a bit more conservative at that point and paid down debt, saved for a house and paid for our engagement ring, wedding and honeymoon, and saved about 5 months of expenses for emergencies after we bought the house.
I have a goal of $100,000 income in the next few years (by age 30, I’m 26 now), and I have much more drive now than I had back when I was younger. We’ll see how it goes. I hope to build up some online income soon, and work towards that goal. I’ll share it on the forums as I get closer and closer :)
I know I just completely over-answered your questions :)
You can change any habit! It may be more difficult, if you were brought up to spend. As I near retirement, I wonder if I can change from a saver to a spender. It should be fun to see if I can change, I get around the frugal feelings regarding business and first class flights by using frequent flier miles. Spending a few hundred dollars in taxes for a flight and that all for a first class flight is sweet.
I don’t think you can, but good luck, as you SHOULD spend your money as you’ve spent how many decades, 4 now, saving it?
I would have bought the real super glue because of a belief that the cheap product won’t hold up as well and prove to be worth the money. It might have been three times less, but if it didn’t work, it was extra money out of pocket. Tried and true for me, baby.
I do believe there’s truth in your assessment that we might be hardwired. That’s why I’ve found that when someone really has the guts to acknowledge who they are and what their tendencies may be around money, they’ll change.
I can’t have five dollars in my pocket or I’ll spend it. It’ll go away. So, I never have money available because I know me. When I shop online, I always spend less, so that’s how I shop (if there would have been reviews of the superglue online I would have read 10 of them and gone with the cheapest one that was well-reviewed). I work from a menu plan because I’ll eat anything “unplanned” in the house. I think by knowing “you” and being honest with yourself you can work to be successful regardless of your hard-wiring.
Bingo…. the word is Congruency.
Don’t worry, I can’t help but stuff my face if I see a 28-day dry-aged rib-eye with baked potato either.. and I’m now 70% vegetarian!
The generic super glue works just as well…. ouch, my finger.
Corey mentioned psychology that has a lot to do with it. While I do not know about birth order affecting it, I can say that the methods of learning can explain spending habits.
If kids have happy childhoods from their parents spending lots will likely go on to spend their own money willy nilly. But if your parents spent all their money and then you lost you house you will probably change your habits to be frugal.
The same goes for frugal parents. If the child realizes that they don’t need all the latest toys then they probably will be frugal adults as well. But if the kids grow up desiring things they do not and will not have, spending lots as adults will result from the negative reinforcement and the spending could be seen as a sort of rebellion.
Observational learning could also explain it. Parents may be the only kind of spending you witness close up, so then you won’t know how to spend money differently. But if you admire your rich friends’ parents then that has a good chance of being your future behaviour.
That may be simplifying a complicated matter but I saw a chance to finally apply a little bit of my book learnin’.
Interesting point on the behavioral learning. The only thing about that is what happens as you grow through let’s say various school systems and are now surrounded by people spending? Even expectations about environment? I loved the perspective but would like to hear more about how different concepts could play into it :)
Spending habits can change, but it usually takes a lifestyle adjustment. For instance, I’ve been a huge Starbucks addict for most of my adulthood. But, I just received a Bialetti espresso maker for my b’day. And you know what? I’m actually using it! I now allow myself two visits to Starbucks a week (for old times sake), instead of the regular 7. So spending habits can change, even addicting ones. :)
Haha, nice! I have NEVER understood the coffee addiction. Everytime I walk past one and see the lines, I’m like HOLY F! Who would stand in such a long line to drink a 500+ calorie drink for $5 bucks?! Isn’t that a triple whammy? Feed the needle into the vein!
Glad you’re changing!
Sam,
Spending habits do change. The more you make, the more they change. However, it’s still possible to be frugal. Your clips is a good example, but if you were bringing in $500K, I doubt you’d still be driving a Honda Civic. You’ll probably upgrade to an entry level BMW or Benzo, preferably used, as the depreciation was absorbed by someone richer (in most cases dumber) to purchased it new. Very few people don’t change. I’m living proof of that. In my early 20s and with a pile of debt I was driving sub-average cars. Recently I decided to upgrade to a BMW. No consumer debt (other than the car now), and I needed another set of wheels, because the mileage was only getting bigger.
I was raised in a frugal household. My parents made incredible things happen on a combined salary that’s much less than what I bring in alone today. They set a great example. I hardly eat out, cook a lot at home, make coffee at home, exercise at home, entertain A LOT at home and a lot of other frugal things.
Thanks for sharing a great post.
Hi Eddie,
Come again on the BMW analogy and $500K? What type of BMW did you upgrade to? How did you go about deciding how much to spend, and how to pay for the car given you mention you have car debt now.
I’ll take the other side of making $500K and driving a Honda Civic or sub $20,000 car or even a sub $10,000 used car! :) I’m all about the 1/10th rule of car buying.
Ditto regarding the upbringing thing. I automatically look at prices and choose the lowest almost all of the time. My parents cut up scrap paper to use for phone messages. Waste not want not.
Upbringing has tremendous influence on your spending habits. With that said, I still believe that — no matter who you are or how your parents handled money — you can choose to become frugal by adopting simplicity. Once you understand that happiness doesn’t cost mindless spending, you are on your way to become financially fit.
I’ve done wonders with superglue and duct tape lol. I think my upbringing still influences my frugal nature today. I had a period when I first got out of college and was making my own money that I got a little too excited about shopping, but that went away. I love saving money!
Everyone is capable of change. I think being open to change is your insurance that you don’t have to be stuck in bad habits forever. It can lead people out of what feels like a black hole knowing there’s a way out if they just change their outlook and habits.
[…] I can’t help but wonder if it is a load of crap (to put it nicely).Similar to when Sam asked if we can change our spending habits, I can’t help but wonder if we are truly in control of everything. Do we have the power to […]
I am now trying to encourage my children to save by giving a cash reward to anyone who can save the most by the end of the month. I am disappointed because it didn’t work! Anyway, I will definitely try again.
As a parent, best think you can do is teach your kids to be responsible and look out for themselves!
BTW Nothing wrong with economy class, unless you got a 12 hour flight! Just pray you don’t have a large person or a baby near you, and it’s all good.
My parents i’d say were pretty frugal.. Definitely no big spenders. I somehow differ from them.
I started working at 15 1/2 and have been making my own money since then. I like to do fun things, most of which cost money, sometimes lots of it. I have dug myself into a decent amount of CC debt but have definitely been good at not using my CC’s anymore and decreasing my debt.
I think its mentally hard to stop with those habits but you can change them if you really want too. It’s just about having the will power and knowing your income vs spending. You also have to learn to tell yourself ‘NO’ i still find it hard to do this. I stretch myself thin from time to time but Im still managing to live with paying my bills with some extra coin to do fun things every month
I think you really hit a good point here, man. How people are raised plays such a huge role in how they act…and they don’t even know it! I have this buddy who always complains about his credit card debt and in later converations I learned that him and his wife ONLY eat out, they never eat at home. I mentioned this to him and he was just plain, old confused. He didn’t understand what that had to do with his debt. And I think that’s part of how he was raised — his family always ate out. To really change your finances or life in some way, it seems like you gotta be able to take a HUGE step back and start seeing your behaviors more clearly. And I think that’s hard to do.
Well it is sometimes quite hard but not impossible. Once you make your mind nothing is impossible. I must say, as a child I used to spend a lot of money buy toys that I have hardly used for a single day. But today when I have to earn and feed my family. I know the exact value of the money. And my habits are changing gradually and I am teaching my kids same. :)