the sky's the limit, spending choices can seem terribly
arbitrary. To create a sense of logical order, people
with wealth often design structures or systems to guide
their spending over a period of time. By following a pre-determined
formula, their daily decisions about spending feel simpler,
clearer, and more in line with their values. We learned
about a number of these systems while researching this
issue and pass them on to you here.
people treat the income they gain from inherited money
differently from the dollars they earn through their own
work. For example:
money for chosen extras:
Abigail and Burt use their
earned money for basic needs and their inherited money
only for selected extras. As a result they both have built
confidence in their ability to support themselves. They
also feel more in rapport with their working friends.
money for basic needs:
Chris uses her inheritance
to pay for basic needs such as groceries, housing and
utilities. She spends her earned money (which is far smaller
than her inheritance) for extras such as eating out, travel,
and special clothes. This enables her both to enjoy her
luxuries more and to limit their quantity.
money for all personal spending:
David uses inherited
money for both basic needs and extras. He devotes his
earned money to charitable giving. This motivates him
to earn more and helps address his concern about taking
money away from those who need it. He enjoys the freedom
of not working "for a living" and feels energized by donating
the income from his consulting work to causes he has been
many wealthy people set limits by dollar amount (eg. "I
want to spend no more than $1,000 on clothes next year"),
but many enjoy keeping track of expenditures because it
brings them a greater sense of freedom, choice, and control.
Most use easy-to-learn home finance software such as Quicken
(plus a small pocket notebook for cash expenses) and follow
overall budget guidelines such as these:
Elinor reserves percentages of her income for different
uses: 50% for spending, 25% for saving, and 25% for giving.
Her sister, Flora, prefers to designate dollar amounts
to different categories: $50,000 for basic needs, $10,000
for comforts, $5,000 for luxuries, and the rest for giving.
for Me, One for You:
Whenever George gets a massage,
he gives a gift of a massage to a friend who can't afford
it. Since doing this, his choice to spend on certain luxuries
has felt more real to him, and he is excited to explore
this way of balancing spending on himself and giving to
others in more arenas.
Henrietta and Irving decided to use
principal for down payment on a home but not for buying
a car or computer. They were then clear they needed to
save income for those larger purchases. (This method is
irrelevant to those with very large incomes.)
Because Jacqueline had an easy time spending
on her children and giving to others, but a hard time
spending on herself, she decided for the next six months
to designate $100/month on spontaneous and fun spending.
Having clear limits on the amount of money to spend encouraged
many people, it is not the dollar amounts that are important
to them, but rather the spirit and thought behind their
When Kevin printed out a report of
his expenses, he was shocked at how much he had spent.
He resolved over the next month to ask himself before
each purchase: "Am I spending this money in line with
my deeper values and purpose?" He felt that such frequent
questioning (at least for awhile) would assist him in
achieving greater consciousness. (Questions such as these
are being promoted by the New Roadmap Foundation).
Larry, an impulse buyer, talks about any
purchase over $100 with his father. His dad, Manny,
had the same tendencies, so now when he gets the impulse
to buy a major item he waits at least a month before making
the purchase. These systems help them both to step out
of "the heat of the moment."
Before taking her item to the checkout
counter, Nancy thinks of a few other things the money could be used for.
When she tried out a guitar, she imagined that the money
might have paid for a far-away friend to come visit her.
Making the tradeoffs vivid helped the amount of money
seem more real to her.
you know of other systems wealthy people use to guide
their spending, we would love to hear about them. For
those who have never adopted structures, we hope this
list stirred your imagination about the possibilities.
Please keep in mind that overall guidelines like these
can sometimes mask deeper issues, giving the illusion
of easy "solutions" to complex issues.
if you follow a simple spending formula, we encourage
you to keep examining your underlying needs and values
and the opportunities money brings to your life. Be sure
that whatever structure you adopt is streamlined and fun,
not a burden that you will soon resent and leave behind.
Remember to "keep your eyes on the prize": to align
your spending with your larger purposes in life. .
© 1990-2005, More Than Money, All rights reserved