How You’re Lying to Yourself Every Day About Your Spending Priorities

I’ve heard a few great arguments made lately about how we make liars out of ourselves all the time with our so-called “priorities.” Many of us say “Travel is DEFINITELY a priority for me” or “I’m serious about getting in shape.” But are these things really priorities? And does the time and money you spend on these things really back up what you’re saying.

JD Roth of Get Rich Slowly first brought this to my attention at the World Domination Summit 2012 when he said “It’s not what we say is a priority, but what we actually DO that’s a priority.

Then Steve followed it up nicely on Nerd Fitness by pointing out how messed up we are when we claim we don’t have time to do something that many of us claim we value – exercise.

I found that the same is true for money: How we spend shows our true priorities, not how we hoped we would.

Find Out If You’re a Liar

But how do you know if you’re lying?

Ramit challenged readers to try this exercise::

Write down the following:

  1. Where do I think I’m spending my money?
  2. Where do I want to spend my money?
  3. Where am I actually spending my money?

Look at your results. Many of us claim that we have certain priorities in life, but we make liars of ourselves all the time.

Maybe you don’t even know the answers to some of these questions – and you’re likely wrong about #3 if you never track any spending (trust me, I’ve tested it with myself and friends). It’s stupid easy to get fantastic data on your spending with Mint, so get on it.

Once you’re able to figure out the “how” of what you’re spending money on, see how that matches up with where you want to spend money. For most people, my guess is it doesn’t match up well.

Many of us would probably say something like “Travel is a HUGE priority for me.” Well, how much do you actually spend on travel? How does it compare to what you spend each month or year compared to alcohol, restaurants, cars, rent/housing, entertainment? Now that you look at at,It’s probably pretty low on the list, right?

No one is going to be perfect on where they prioritize their money. But are you getting closer to where YOU want to be with your spending? Or are you moving further away from what you think is most important to you and spending it on what society/others tell you is supposed to make you happy?

What’s the Fix?

It’s definitely a challenge that takes some work to get spending in line with what you consider your priorities. Don’t fool yourself by thinking you’re going to go from spending $300 to $0 a month of restaurants witha  snap decision.

But think about how you would spend your money if you truly had no limitations or bills that you consider necessities to pay each month. Seriously, write it down. Now, start working towards that TODAY.

How do you make changes today? You could focus on earning more, but I like starting with spending differently.

Spending less and mixing up what you’re used to doesn’t mean you have to go hardcore frugal. The point isn’t to cut out everything you love spending money on. It’s really about moving the funding around to other stuff that you just enjoy more.

Example: I HATE just about everything about owning a car, so I don’t own one and devote exactly $0 to cars.

If you’re not thrilled about buying lunch every day at work, don’t do it. If driving around in your brand new car isn’t part of what gets you most excited, sell it. If you’re living somewhere but know that you could pay less for another apartment and be just as happy, move.

Then take the money you saved on these things and put it towards what you care about. If you want to take a trip to Europe, save and buy the ticket. If you love eating sushi every week, find the money and make it happen.

When it comes to making sure money gets spent the way you want, here’s a trick for saving money for travel and other things that aren’t consistent expenses: Automatically put money aside savings. It works!

Just set up a new savings account on ING Direct and have a certain amount taken out of each paycheck to go towards travel or whatever it may be. It doesn’t have to be much – maybe just $20 a week. In a year’s time, you’ll have $1,000 for vacationing.

Once you have this money set aside for a certain purpose, it’s harder to make the same mistakes and excuses that you had before. If it’s in a separate account, you’ll consciously have to remove it and make yourself a liar on spending priorities.

What do you wish you could spend more money on? What’s stopping you from doing it?

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Comments

  1. Afford-Anything.com says:

    I love this post. I know so many people who claim they have a particular priority — “I want to quit my job and become a freelance graphic designer!” or “I want to travel to Africa!” — and they never do a gosh-darn thing about it. Well, I’m calling BS. If they’re not lifting a finger, then its not really their priority.
     
    Unfortunately, there’s a difference between “priority” and “dream.” Some people never make their dreams their priority.

  2. Jeff, I really like this post!  I completely agree we lie to ourselves all the time about spending priorities and what we actually spend money on.  I’m glad you included the challenge Ramit posed to readers.  I think there is a lot of value in tracking spending everyday.  I use YNAB and capture everything my wife and I spend so we can review it and try our best to make changes when necessary.

  3. I know the answer to #1 and #3: I spend all my money on rent, debt payments and living expenses for the last 25%. I don’t know the answer to #2. Because right at this moment I don’t want to spend ANY money. I just want set aside money and also pay down debt. When I am out of debt, I haven’t considered what I want to spend money on other than a down payment on a house and a business. I never had a problem spending money on things I valued (time with family and friends and traveling to see them and new spots) so I think I will be able to spend my money the way I think I am going to once I am out of debt. Of course I also got into debt by spending too much on clothes and dining out, but I don’t value those things nearly as much as I used to,so I don’t miss spending money on them. Great post!

    •  @IAmDebtProject Well, your answer for #2 is setting aside money and paying down debt :) It can be anything, doesn’t have to be material stuff. But I think most people have at least some things they like to do regularly and will still spend money on. And I think that’s totally okay, even if you’re paying down debt, but it’s your choice.
       
      And yeah, the cost of 90s track suits can def add up ;)
       
       

  4. Good post. I think this is why budgets are so important. People see budgets as something that will restrict them. The budget will keep me from being able to get what I want. The truth is it’s really just the opposite. The budget is a tool we can use to get exactly what we want. We all have a limit to the money we have available to us. A good budget is a tool you can use to make sure that you spend your money on the things that are most important to you. It is really about setting priorities, taking a look at what you have coming in, and responsibly deciding what is most important to you and where you want that money to go. Instead of restricting you, the budget is really the tool that will allow you to live your dreams.

  5. I wish I could spend more money on a nicer car and fly business class, but I feel absolutely stupid doing so.
     
    I’m addicted to saving and investing!  
     
    I also feel a little bad not working anymore at a corporate job and maximizing my salary. Self employment/retirement is nice, but I do wonder. Sam

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