An extra $100 used to be awesome, but having an end of year bonus drop is a mix of anxieties…some impostor syndrome, some upheaval at messing up the family budget, a little bit of "Well I got this windfall, but the thing I really want is $XX more, and if I get it, It’d screw up our program…followed by "Well, that purchase didn’t feel as good as I hoped, and now we’re back to living the budget.
It’s happened 2-3 times in my life and each time it does, it seems to be more trouble than it’s worth.
Give it to me, then.
Problem solved.
Ha. Yeah. No.
But it does bring up another issue…there are just some topics that are really hard to find a forum to discuss…Kinda like that ‘You think YOU’VE got it bad! I’ll have you know my situation is twice as bad as yours!’…it doesn’t diminish the fact that someone is dealing with something, even if someone else has it worse.
I’ve experienced this too. More money does not equal happiness or a lack of problems.
Bonuses or any windfall really of unpredictable but not life altering size are an opportunity to take all our hang-ups about money and self-worth and project them onto that small wad o’ bills.
Since you’re the one doing the projecting, you’re also the one whos’s got the opportunity to pass on the projecting and just take the cash as cash, not as cash+baggage.
Give it a try, It isn’t necessarily easy, but it can be done.
Projection is a REALLY good way of putting it. I think there’s also a little analysis paralysis as to what you actually want to DO with it. Some percentage should be rainy day, and some should be mad money…it shouldn’t all be spent on hookers and blow.
Something to consider: If you’re feeling pinched by your budget, that implies you ought to be saving any and every extra nickel that comes your way. “Hookers and blow” feel good for the moment, but that’s the way to spend your whole life scrimping & stretching & sweating.
See this recent thread for some ideas about making money work for you more than you working for your money. There’s a wide swath of America stuck dragging just a little too much weight to ever pick up any speed.
Good luck whatever you do.
I was raised with a strong emphasis on savings. If we were given money as gifts, half had to go into the bank. When we got jobs, we were supposed to tuck some away. As a result, when I get some unexpected cash, my first inclination is to stash it in the bank.
Spousal unit is almost the opposite - if it’s not budgeted, then have fun with it!! He almost had to force me to take a surprise bonus and buy some hobby supplies I’d toyed with getting. If not for him, I’d have passed, but instead, I got some things that I’ve truly enjoyed!
Extrapolate that to now - we’re retired and the future we saved for is here. It’s a challenge to dip into savings to do the fun stuff we saved for, but I’m learning.
That is a challenge for many people. But not nearly as daunting a challenge as trying to live elderly with no savings. Which is where hubby might have left himself without your fine influence.
Those are the horns of the dilemma younger folks like our OP are sitting on.
I was being evasive. Our budget, savings and retirement plans are all well at hand. But I didn’t want to offend people on the board who may not be in as healthy a position. At this point I think the lions’ share will go to some medical expenses that would otherwise tap out our HSA and help with the kid’s tuition…but I will take a chunk for fun so it doesn’t feel like every dollar I make is for the Greater Good.
When my coworkers asked what I’d do with a free $50,000, they got all disappointed that I’d throw it into my mortgage. I was a little pissed, saying, “Hey! You asked and I answered. Get off my back!” And the truth is, every extra payment I make is shortening my time paying off that burden that much more. And a big bonus payoff like $50k would probably preclude another $4-5K in interest over the long haul, which is virtually free money tacked onto the $50k and shortens the mortgage even more. Win-win-win all around. Of course if I do get the mortgage paid off extra soon, I don’t know what I’d do.
Remember (~2017-2018) the small-scale test where a few Finns got ~500 €/month of free money? And the test was somehow deemed a failure because the people did not report feeling like their financial security was substantially improved? I remember thinking, what did they expect? It’s nice to have that money, but it is too little to turn your life around if you are otherwise unemployed.
I found one BBC article reporting that the small amounts of “free money” at least made people happier, so there is that.
People get annoyed with me when I point out that if you have a regular job you aren’t in much if any control of how much comes in BUT you have way more control over what goes out so if you can’t up your income you can accomplish basically the same thing by lowering expenses. It’s not sexy but it does work. I helped a friend with an experimental startup and he was floundering and going crazy trying to make more sales so I stepped in and lowered his production costs by over 40% so suddenly making every single sale wasn’t nearly as important. Getting out from under debt, even manageable debt like a mortgage, is a huge financial gift to give yourself because you increase your flow of income while lowering your stress levels considerably. Get hold of the “hood rich” impulse to blow every spare penny and pretty soon you’re way more comfortable than you would ever have thought you’d be. It’s just not as “fun.”
One of my brothers is almost a miser. His motto:
The best investment is not spending. It pays 100% guaranteed and right now.
He has a point.
Of course there’s also a huge difference between “You’re drowning due to ongoing discretionary purchases” and “You’re drowning due to ongoing monthly payments for loans on cars, boats, houses, etc., that you’re upside down on.”
Fixing the former takes will power. Fixing the latter takes selling that crap at a loss AND free cash to pay off the loan deficiencies AND perhaps more spending for moving. In all a tall ask when your back’s to the wall.
So what IS the solution? The only way to win this game is not to play. Don’t think of purchases in terms of their monthly payments, and especially not purchases of depreciating assets.
A penny saved is better than a penny earned. If you cut $100 off your spending, you keep every dollar of that $100. But if you increase your income by $100, you have to pay taxes on it. I’m not saying it wouldn’t be better to get more income. Only that saving money can have a bigger return than increasing income.
Sounds like my parents. My father was always the big saver, and tended toward frugality even when it wasn’t really cost-effective (i.e. he’d get cheap stuff that actually cost more in the long run, because he didn’t like the initial outlay). Mom OTOH has always been more prudent I think. She’s all for saving, but not obsessively. She recognizes the value of spending money to improve your happiness, lifestyle, etc…
In my brother and I, this difference more or less manifests itself in both of us having fairly significant saving schemes, but also little reluctance to splurge now and again with some surplus, as long as we have enough saved to feel comfortable.
In a windfall situation, I think I’d consider my savings, and then if it wasn’t where I’d like it to be, I’d put most of the windfall there. But if it’s close, I might only put half, and if it’s where I want it or ahead, I might put 10%, or even none into savings and spend the rest on something fun. That’s also dependent on the size of the windfall; if I got $1000, it would probably go the way I describe above, but $50-100 would probably just go into the general bank account without any real consideration as to being saved.
I do have some experience with this actually; my first job out of college didn’t pay too great (similar to a first-year teacher) in terms of paychecks, but they had an extremely generous profit-sharing scheme. So much so that in 1997 and 1998, I earned bonuses equal to 50% of my annual listed salary, so that my actual income those years was roughly 150% my listed salary. I did exactly what I described above- I saved about 3/4 of it, bought a few things that were major improvements/needed, and spent the rest on fun stuff.