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YOUR spending is bad, but mine is good

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Isn’t it interesting how hypocritical we are about money?

We say things like…

  • “That’s ridiculous. Who needs a $200 dinner? That would feed me for 3 months.”
  • “She bought $400 shoes? What a waste of money.”
  • $21,000/year going out? There are starving children in Africa.”

Yet when it comes to our new iPad or computer or trip, it’s different.

We look at others’ spending and deride it as frivolous and unnecessary, yet we use cognitive dissonance and other mechanisms to justify our own spending. And we’d never expose our spending to the light of outside scrutiny.

I’m working on a monster post about how hypocritical we are with money — and especially how we believe that “money=evil” in America. If you have any stories to share, let me know in the comments below. Have you judged others for their spending? Been judged? What do you think of someone paying $1,000/night on a hotel room or $500 on a pair of jeans? What about an iPad?

Stay tuned for the larger post.

[Update] The largest post is up here: Attention annoying hypocrites: Stop being judgmental about your friends’ money habits

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Odds and ends…

If you’re interested in the single-best book on how we’re cognitively wired to blame others but not ourselves, read Mistakes Were Made (But Not by Me): Why We Justify Foolish Beliefs, Bad Decisions, and Hurtful Acts by social psychologist Eliot Aronson (whose class was one of the best I took at Stanford). It is absolutely chock-full of psychological insights and will give you tools to analyze/understand friends and co-workers in virtually every social situation.

Also, you might notice some minor design changes that rolled out on iwillteachyoutoberich.com last night. We’re doing ongoing testing.

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91 Comments

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  1. Student in London Link to this comment

    I agree that there is hypocrisy but the main issue I have when people make those extravagant purchases is that it’s usually because they can’t afford it/I know that they’ll quickly tire of them and look for another fix/they are just getting it to keep up with the Jones’.

    If someone has saved up for a much desired item and made sacrifices along the way with their spending then I have no problem. (as long as they do not buy it on credit or use their emergency fund)

  2. I read somewhere that our use of the word “money” is wrongly applied.

    Money is a tool. In the same way a spade is a tool.

    So it doesnt make sense if someone said “spades are bad”. Or that person has too many spades. Or using too many spades is wrong in this climate. Or “I love spades!” Its laughable.

    It made me think a lot about how we have completely misused the idea of money. Its only a tool.

    Looking forward to the post Ramit.

  3. My girlfriend freaked out about my new €350 smartphone, yet she always buys the most-expensive brand name food when she goes to the supermarket when the cheap versions are just as good. I guess that makes both of us hypocrites 🙂

  4. Two things: Sometimes it’s a matter of not removing the log in our own eyes before worrying about the speck in someone else’s. Occasionally it’s just a matter of different priorities.

  5. I see this all the time. Sometimes I catch myself internally saying “What the hell was she thinking.” but as you say we all have different priorities.

    I too have been judged. Each year I go out to Las Vegas for a week long conference. During that week I take Vegas up on their amazing chefs with my average dinner bill being $250.00. Some of the people I work with think I am crazy for spending that much on dinner but my taste buds tell me otherwise. Meanwhile the majority of the people I know will end up eating at one of the cheapest all you can eat buffets they can find, followed up by $200 dollars of gambling while they digest the culinary abortion they just consumed.

    I’ve justified it to myself in the sense that I only do it once a year and I don’t go into debt doing it. Since I can afford it, and do enjoy fine dining, I go by the motto ‘When in Rome’.

  6. But Ramit: if we can’t be judgmental and hypocritical about our money spending, when can we be? 😉

    I do this pretty regularly. As I’m not into nails, hair and makeup, I look down on people who spend a lot of money on these items. But the books, CDs and gourmet food I spend my money on – well, that’s educational or health related right? DH and I rotate back and forth on calling the other on running supplies (usually whoever most recently bought a nice new pair of shoes) It’s silly but at least (usually) we can laugh at ourselves.

    I’m with others who say, so long as they don’t go into debt to do it, it’s their money. But I still reserve the right to tease mercilessly.

  7. I don’t know the exact financial situation of most people in my life, and living well is great if you can afford it. But, if someone mentions how broke they are just weeks before going on vacation to a $300/night hotel – let the judging begin. Or, when someone you just loaned money to gets their computer upgraded (which they don’t use for work), and tells you about other frivolous purchases they’ve made – judge away!

  8. I have a lot of friends that will sit around and talk about how people spend their money, what they choose to spend it on, etc. I always try to challenge those little judgement sessions. I think everyone has or should have something that they are willing to spend a premium on- it makes life more enjoyable. The trick is to make sure you save and budget for those expenses. As long as you’re not going into debt, who are we to judge how you spend your money.

  9. I was once out for drinks with some acquaintances and someone asked what the most expensive “splurge”, unplanned purchase we had ever made was. Some said a stereo, a handbag, when it was my turn I had to say “I spent $500 on the cowboy boots I am wearing right now.” This was in Chicago. They all looked at me like I was nuts- at that time I was working as a full time volunteer with a stipend of $20 a week.

    I am actually riddled with indecision about finances because I think of people who live on $1/day when I buy lattes, or clothes. I do give charitably but Dorothy Day’s injunction that to have two coats means one is stolen from someone in need just stays with me.

    I would like to hear this addressed as to how to best leverage our own security and finances in order to make the biggest impact.

    And I judge my sister for her spending all the time (however she is doing it on loans, if she had the money I would be much less disapproving.)

    • Wow $500 cowboy boots. You go girl! I love shoes so I know how tempting that can be. If you can afford your boots and paid for them responsibly then you shouldn’t feel guilty. If it helps you can always donate one old thing for every new thing you buy. Whenever I start to buy more clothes for my closet I take out some old things I no longer wear that are in good condition and donate them to Goodwill or some other organization. I also donate to United Way monthly and try to give of my time however I can. Enjoy those boots.

  10. I’m constantly judged on my wedding expenses. I can’t begin to count how many disapproving looks I’ve gotten from friends and relatives (especially the future in-laws) who have caught wind of how much we’re spending. The reality, of course, is that I paid for most of my engagement ring myself with money from savings, and the wedding will be paid in cash, thanks to an aggressive monthly savings plan on my end. My fiance is investing little to none of his own money, because a big beautiful wedding is my dream, not his, and I make enough money to be able to afford it without having a negative impact on the rest of my budget. The worst part is that my friends and family KNOW that I make enough money to be able to afford it, yet they still judge me for choosing to spend my money how I want to spend it. It’s one thing if someone is drowning in debt and is continuing to rack up expenses, but if someone is financially stable, stop judging them for what they choose to purchase!

    • Your wedding plan is straight out of Ramit’s book: spend extravagantly on what you love and cut costs mercilessly on what you don’t.
      Don’t let anyone give you crap. Have an awesome wedding!

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