Splurging or overspending on any one item or in any one area is not necessarily bad. Sometimes our jaw drops when we see how people spend money in certain areas. These items could be cars, dining out, specialty foods, collectibles, travel or any other passions that one may have. We may judge them and think, how can they afford that? What is the point? Why? Are they jeopardizing their family’s financial security? Their retirement?
Everyone should set limits on how much they spend. However, it is OK to spend money on fun items and things that bring us joy. I remember my college economics professor, Dr. Duncan Bailey, teaching us an important lesson on scarcity. He told his teenage daughter, “During your life, you can have anything in this world you want. It can be a luxury car, a beach house or anything. But! But! You can’t have everything.”
This one simple story has been a major part of my personal financial life and used regularly when teaching groups and when counseling clients. This is a simple but very important lesson.
We simply can’t have everything. We must choose what is important to us: Having a nice car, wearing nice clothes, a comfortable retirement, etc. Over indulgence now can lead to being destitute later, i.e. the “poor house.”
As human beings, what we desire, we want now. We want instant gratification and our society teaches that we can have it now.
One person put the definition of financial planning as:
...The continued, predetermined, allocation of limited financial resources to unlimited, changing alternatives. To simply put it, there is a limited amount of money and unlimited places to allocate it (spend, save, pay off debt or give).
It is OK to spend more than one may believe is prudent in any one area or any one item, but we must sacrifice in other areas to do so. The key word is sacrifice.
Setting limits and boundaries is not meant to hurt us but rather help us accomplish our goals and do things we love. We must be willing to make sacrifices to accomplish our healthy goals.
Remember: You can have anything in this world you want, but you can’t have everything!