Are You Spending on the Wrong Things?

Do you spend money on things that you don’t even like? Are you cheaping out on areas where you derive the most enjoyment? This is a type of financial risk.

The two previous posts in this series on money and risk are:

Inflation Risk

Risk of Needing Money Suddenly

This article is about the risk of spending money on things that don’t matter to you.

Reckless spending can be defined as overspending or getting into debt. However it can also be defined as thoughtless spending; purchases that don’t line up with your values. This is a recurring theme in the book Your Money or Your Life (which I highly recommend). It’s not just about the dollar amounts, but about the benefit you get for those dollars. Ideally you don’t want to feel guilty after a purchase, nor do you want to make purchases without thought.

There are two components to this risk:

  1. Overspending on items you don’t want, need, and/or like
  2. Underspending on things that would improve your life and increase your happiness

How does the first one occur? We are under constant pressure from advertisers, friends, relatives, and society to make certain purchases. A house and car come to mind as far as big purchases. But little purchases matter just as much. It’s considered normal to own many clothes, shoes, tools, household items etc…

Not too long ago you’d only have a few sets of clothes. You might borrow a tool from a neighbour. You wouldn’t be running to the coffee shop on your way to work. You’d either make coffee at home or drink it at work. Going to a restaurant would be a big event, not a common occurrence.

When did our culture become consumer-driven? It’s a slow transition over decades, but now most of us have grown up in the era of discount department stores, malls, 24-7 convenience stores, and more restaurants than you could possibly visit if you went to a different one every day of the year.

It’s so easy to get trapped in doing what is normal. As a child or teen when you get your own spending money it’s exciting to make your own purchase choices. For a young person this is an important part of growing up; learning how to decide what to buy and when. With limited money you were more likely to consider your choices carefully. (I used to only buy the O’Henry type of chocolate bar, as it was the heaviest, which meant a better price to quantity ratio.)

But then you get a real job and you could do away with some of that childhood discernment. You may have started to lose sight of how each purchase should be thought of as an individual choice, affecting your future money choices. If you had a credit card, then your available cash increased even more. Soon you were buying things because your parents had them, your friends bought them, or to feel more adult.

Then (if you are lucky) you suddenly wake up and realize you don’t even know why you are buying the things that you buy. You are spending money carelessly on things that you may not even want. That money could be put to better use.

The Opposite Problem

Are you avoiding purchases that would make your life better in the name of frugality or to balance out other poor choices?

If you don’t have unlimited money it can be easy to slip into the habit of self-denial. Some people are extremely frugal in all areas of their life, possibly to their detriment, but that is a topic for another post. For this article let’s assume you have a certain degree of disposal income and aren’t super-frugal in all areas. You are overspending on some items, often those that are visible to others such as a nice house or meals at restaurants, but then feel you have to make up for this excessive spending. So you respond by being really cheap in areas that other people can’t see — items that are just for your own amusement.

Perhaps you’re a knitter and you’d love to use alpaca yarn, but you feel you can’t justify the extra expense, so you buy a cheap synthetic yarn instead. As a result the product and the process aren’t as enjoyable as they could be. But you are making careful money decisions, so it’s worth the sacrifice, right?

Or you love gourmet cupcakes (who doesn’t?) but one cupcake costs $3, so instead you buy 6 chocolate chip muffins at the grocery store with that $3. They’re good enough, but not gourmet-cupcake good, and since you have six you end up eating them all in 3 days, and feel fat and sluggish as a result. Was this really a better use for your money?

What is happening is that your spending choices aren’t lining up with what you actually enjoy. We all do this to some degree.

If you charted your spending amounts compared to your enjoyment levels you might get a graph like this:

Step One:

Think about your currently owned items and recent purchases. What purchases do you least regret? Why?

  • Was it because you had a great experience?
  • Spent time with your friends?
  • The item is exactly what you wanted?
  • You use it all the time?
  • It’s beautiful?

Use this what and why list to think about what matters to you. What end result made a purchase a good choice?

Now what items do you wish you hadn’t bought, that turned out to be a waste of money? (Like my car.)

  • Did you end up not using them as much?
  • Already have too many?
  • Could have got it cheaper elsewhere?
  • Clutters up your house?
  • Not as pretty as you once thought?

This will help you start a list of the types of purchases to avoid in the future.

Step Two:

Put your analysis into practice. Enter your lists and shopping tips into your phone so you can easily review them wherever you are.

Here’s an example of mine:

Do Not Buy:

  • Sugar – remember how you feel bad when you eat sugar
  • Alcohol – same as above
  • Have you checked the second-hand stores or kijiji first?
  • Is this mass-produced and could you get it made by someone local?
  • Have you thought about this purchase for a while?


  • It’s made locally and you really like it
  • This will make your life easier and it’s small and portable
  • It’s on your shopping list because you’ve already thought about it and decided you need it

Ideally, the items you spend the most money on will be the items that you also enjoy the most.* I enjoy fresh, local food, so it makes sense for me to spend more at the farmers’ market and less at the big chain store. Do I always make the right decision? No. I’m still struggling with this. But the more you think about this kind of thing, the more closely your spending will align with your values.

Yes, many enjoyable things cost no money. I’m not saying that the more money you spend, the more enjoyable the activity will be.  The point is that if you truly like something, be willing to spend money on it. And most importantly stop wasting money on things that don’t improve your life.