Thursday, May 29, 2014

Spending Reality

How you "spend" your time and money determines the priorities you have in your life at the moment.  I blogged about time and how that varies over the decades of your life (see Blog  11/18/12 Learn/Earn/Live/Give ).  How you spend money will also vary over the different decades of your life.

J.P. recommended that I read the book "The Righteous Mind" by Jonathan Haidt which references an interesting Psychology site  It was at this site I took the survey called "Experiential Purchasing Scale" - How do you spend your money and does it say something about your moral values. 

The final question was to estimate your spending by five categories - Essentials; Savings; Material Purchases (furniture, clothing, jewelry); Experiential Purchases (vacations, concerts, meals); Charitable Deductions;   Hmmmmmm   this is not an easy exercise even with the detailed accounting that Susan and I have done since 1988 (we have recorded all our personal expenses into Financial Navigator software).  Naturally I have all those historical expenses detailed in a spreadsheet and so I went about the task of verifying my gut feel with actual data. It was an exercise in futility.

Just like problems with General Ledger Accounting - this 'functional view' was not just a simple exercise in adding certain general ledger accounts.  The "essentials" of house and car (even food) might be viewed by others as luxuries (or material purchases).  Another "functional accounting" issue would be the category of a pool at the house (which thank goodness we no longer have) - is this a material purchase or an experiential purchase (clearly it is not essential)?  And ....  how we spend money varies dramatically with our "ages and stages"  (single, married, kids, empty nesters, etc.).  What starts in life as material purchase priority turns into experiential purchase as we age.

So my answer to the survey was .......  at best an estimate of my values hoping the spending reflected that reality.

There is truth in the premise that how we spend money reflects our values.

Your are what you spend.    It's just too difficult to measure :)

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