Want to spend smart? Splurge on everyday life

Worth every penny
photo courtesy flickr user mandydale

With the economy still tepid, many of us are trying to spend smarter. What's the key? The usual advice is to cut out small indulgences: lattes, lunches, the pricey shampoo when the generic is just as good. These are, of course, discretionary expenses, and so using discretion means letting them go.

The problem with this, though, is that you wash your hair and drink your coffee almost every day. Every time you get in the shower, you'll be reminded that your budget shampoo doesn't smell exactly how you like it -- and so you'll pay for that $5 you saved over and over again. Humans have a limited supply of willpower. Is the shower really where you want to spend it?

Probably not. So a better idea is to sweat the big stuff. Buy less house than you can afford. Clean up your credit score and save up for a big downpayment so you get the best interest rate possible. Negotiate hard next time you buy a car. Contest your property-tax assessment. Move to a lower-tax state. Don't buy anything you'll only use rarely or don't know if you'll use -- appliances or equipment for a sport you're thinking of taking up (but probably won't). Borrow from someone else until you're sure that sport or appliance will become part of your daily life. Any of these moves can potentially save you hundreds -- and perhaps thousands -- of dollars at once. And having made the decision, you most likely won't rethink it. I would, in theory, like to own a piano. But given how little I play these days, I don't spend time every day lamenting the piano's absence. Not owning fancy ski equipment doesn't cause me grief on a daily basis.

But if you know something will be part of your daily life? You'll get the most pleasure from your money if you spend to your satisfaction on these things. If you write in a journal every day, buy a journal with a pleasing cover and smooth-writing pens. Enjoy your coffee -- the good kind. If you find yourself driving to a university with piano practice rooms three times a week? Go ahead and spend on a beautiful instrument for your house. You know you'll use it -- and spending money on things you use, and not on things you don't, is the definition of smart.