We Can’t Afford It Remains Taboo

I had a conversation with friends on vacation earlier this year and the subject of money was raised a few times.  One interesting money subject we discussed was where and how we spend our money.  I’m of the opinion that if we want to take good care of our finances, we must take responsibility for what we spend our money on.  My thinking is nobody really wants you to save money.  Well, maybe the bank.

Like Carl Richards nicely explained in his recent book The One-Page Financial Plan budgeting is beyond numbers, it could be considered an awareness exercise. Taking this approach budgeting can be used to reflect upon what you value in life.  More specifically what you value spending your money on.

I recently took at look at our budget and this is where our money goes every month.  Here are some reflections:

  • We pay ourselves first every month with automatic RRSP contributions. We invest in low-cost indexed products inside our RRSPs so I can conclude from this we are mindful of investing fees while making our financial future a priority.
  • We pay our mortgage but we also make lump sum payments on our mortgage. I can conclude we don’t like debt and we want out of it.
  • We put away a small amount of funds every month for home improvements. I can conclude we don’t want to incur any new debt for these projects.
  • We try and max out our Tax Free Savings Accounts (TFSAs) every year. Doing so will provide us with more financial flexibility as the dividend income rises.  We maxed out these accounts earlier this year but with the 2015 budget announcement, and $4,500 in TFSA contribution room available to each account we own, we’ll be looking at ways to max out our contribution room again later this year and into 2016.
  • We are making a car payment on a 3-year-old vehicle but we also own a 15-year-old car. I can conclude we don’t value fancy cars (at least right now).
  • We put away some money for travel every year. Travel experiences, locally or afar are very important to us.
  • After RRSP contributions, extra mortgage payments, TFSA contributions, savings put aside to improve our home and for travel, there is really nothing leftover.

These bullets lead me to this – we can’t afford to do many other things. I’ve said a few times to folks over the years “I can’t afford it” or “we can’t afford it” but that doesn’t necessarily mean I/we couldn’t pay for other things if we wanted to.  What it means is we put a higher value on certain things in our life.  I don’t see this is as a bad thing but I can appreciate other people might not feel the same and that’s OK by me.

I’ve always thought budgeting is a good exercise because it reminds us about what we value when we spend our money.  After all, life comes down to choices.  Your choices are a reflection of what you value.  Trying to stay true to what you value is not taboo.

Time Spent and Money Spent

Image with blogpost courtesy of Carl Richards – The Behavior Gap.

What’s your take?  Do you see a link between what you value and what you spend your money on?  Share your story.

47 Responses to "We Can’t Afford It Remains Taboo"

  1. While I’m not a huge budgeting fan personally, I agree there is definitely a link between what you value and what you spend your money on. I value a break from work and daily grind of dishes and cooking, so I find that I am more willing than I should be to spend money on restaurants. I value travel and time with family as well so I’m more willing to spend big bucks on those things but when my buddy is pressuring me to buy a snowmobile it’s pretty easy to say no. I also value growing my business, so I’m willing to spend money when it’s prudent to help that happen faster.

    Reply
    1. I’m not a huge fan of budgeting but we do it so we know where our money goes. We value travel so we tend to save up for trips and have fun on them.
      I’ve learned over the years people will challenge you on your values. You’ll be challenged yourself. You need to be able to say that magic word “no” 🙂

      Reply
  2. No mention of insurance in your financial plan here in your automated monthly payments. Do you have something in place to protect your income and your investments just in case?

    Also when your investments grow big and you want to pass them on to your next generation is there a plan for paying the capital gains?

    Reply
    1. Hi Laurent, great observation. We do have protection in place but those expenses/costs are rather small when compared to our savings goals. Our plan is to retire early so we’re saving today while living our life. There will hopefully be little to pass on to the next generation since at some point we will spend our capital.

      Reply
  3. Saying you can’t afford it is definitely taboo, especially the higher up the income brackets you and your peer group go. I definitely have said it on occasion.

    (May want to make the Behavior Gap notice a link).

    Cheers

    Reply
    1. Thanks for checking in Adam and there is certainly an expectation the more income you make the more people feel you must spend on things. We are taking a balanced approach – while we have decent jobs – save now to retire early and have some fun but that doesn’t always mean buying stuff.

      Reply
  4. We’ve analyzed our budget many times to see where our money goes and it’s easy to see what we value. Like yourselves we pay ourselves first through investments etc. I agree with paying off the mortgage as it was the best thing we did.. Now that we have a baby we no longer have to worry about that debt. Now we are investing heavily in our retirement and our sons future. Our Budget values have changed since we paid the mortgage last year. So overall we constantly see change based on achieved goals. Great post Mark.

    Reply
    1. No doubt killing your mortgage was a great way to provide some financial flexibility – well done. We hope to continue to invest for passive income and kill our mortgage and travel more in the years to come. Life is short after all!

      Reply
  5. Financial Planner Dude · Edit

    As Dr. Rajagopal Raghunathan put it in the Coursera course Living a life of fulfilment and happiness, people are willing to trade happiness for things. I’ve noticed this in how people manage money, usually it’s seen as a chore rather than a wealth building opportunity. And it’s not just in spending but in also in taxation. To quote Garth
    “Most people, of course, simply don’t understand how they’re taxed or what to do to minimize the impact. They also don’t realize how the tax system is skewed to ensuring the rich stay that way.”

    I have put a great deal of energy into understand how the tax system works here (Germany) that along with having a sharp pencil (as a friend put it) allows us to live a very nice life style on one income.

    Rob

    Reply
    1. This is something I need to work on, re: understand taxation better and my LIF post was a way of making that more transparent. I simply don’t understand all the rules related to LIFs although I’m learning which is the main reason why I run the blog.

      Congrats on living the good life on one income…something we aspire to here Rob.

      Cheers,
      Mark

      Reply
  6. Financial Planner Dude · Edit

    as an aside I personally like to avoid the words like “ we can’t afford it” or “we’re broke”, instead I prefer to say “ we make choices and trade offs”. To me saying we can’t afford it means we’re poor, but making choices means I’m a smart person

    Silly probably but words matter

    Reply
    1. Fair points. I can appreciate “we can’t afford it” has such a literal meaning sometimes…but everything requires context really. Words matter to a point. Thanks Rob.

      Reply
  7. Really great post, too many people these days can’t tie their values and goals back to how they use the resources at their disposal, financial or otherwise.

    Reply
    1. Thanks CalgaryPotato. I guess I tend to link our financial goals to our values, meaning, there is a reason why we save and invest – it has a purpose and we cannot afford to other things as a result.

      Saying “we can’t afford it” is controversial because I think people can get very emotional about money and in doing so, they might have their own take on how other people should spend it.

      Reply
  8. The sentence surely is taboo, but I think it’s just a matter of the words you use. I prefer saying we are focusing on another project for now than saying we can’t afford it. Truth is, most of the times, we could afford it, but we don’t want to (like you clearly said). So yes, it is a matter of values, but mostly of choices.

    Cheers,

    Mike

    Reply
    1. I think it’s all about choice Mike. We all make them (choices) everyday. Saying “we can’t afford it” has a certain connotation, I get that. I guess the flip side is, it is wrong to say you can’t afford it when a) it’s true because b) you’ve already maxed out in other areas of your life or c) that money is already ear-marked for other things? That can be a true statement.

      An example could be we need a new roof on our house and we can’t afford to travel this year. “Afford” is a relative term and everything has a context.

      Reply
  9. Great post Mark. Exactly how I see financial life–as a series of trade-offs of what is important to me (and my family). Both my husband and I are economists and our brains are wired this way, to see all things in cost/benefit terms.

    He values certain things more than me and sometimes this is a good thing–eg. when he wanted to take the kids to Disneyland, my first instinct was that it was too expensive (and maybe too much work for me as the mom!), but because he wanted it I agreed and of course it was the best thing ever.

    We’ve raised three kids on one income and that always involves trade offs, and buying things that you need/want carefully. Two of my kids are great with their money (oldest now in a PhD program has $100,000 saved and I have finally got him to invest it), but the middle one thought nothing of staying in a $200 a night hotel just to have a nice experience……and he doesn’t have any money. I hope he picks up the family habits later on.

    I remember many years ago, when our first child was 1, we were taking a trip to Costa Rica in the winter and a guy I worked with said that was crazy, he could use that money instead to buy a new washer and dryer…..we thought that was crazy! I’d go to a laundromat instead. We travel a lot by most people’s standards, but I love budget places the best.

    Reply
    1. Thanks for sharing Barbara. I didn’t know you were an economist.

      We spend rather freely but there is also a part of us that saves – so I feel/we feel we’re quite balanced although I can appreciate when I say “we can’t afford it” it can be misunderstood.

      My wife and I are quite aligned but we’re also very different – I am happy for that in that she completes me and sees things that I don’t. We all have our blind spots and those that don’t care to admit them have them have EVEN bigger blind spots 🙂

      Raising three kids on one income is impressive! You should be proud.

      Nothing wrong with budget places although a lil’ bit of luxury is fun as well!

      Costa Rica is beautiful and we’d love to go back.

      Reply
  10. Yes, my wife and I have a close link on what we value and where our money actually goes.Our ideas and goals financially are close to each other and it seems to come naturally to us to do this. We are fortunate to have this connection. Discussing our finances, what we want to have and do is a regular topic for us before and during our 26 marriage and helps to keep us focused, where we want to be, and sometimes adds a different perspective.

    We’ve never believed in budgeting since it’s very time consuming and restrictive. However this works for us possibly because we’ve always been acutely aware of where we spend money and why. We prefer to avoid debt, buy only what we can pay cash for (other than small mortgage for 5.75 yrs on 1st home), pay ourselves first, live frugally in general, and spend freely on what is important to us- sometimes significantly. Basically control our money and not have it control us. Our view is if we couldn’t pay cash we really couldn’t afford it and need to wait, or buy something cheaper or used. Security and freedom/financial independence have been our primary drivers, and as time goes on we recognize more that material things are much less important than our experiences and memories.

    One of the most empowering things for us was just saying no, even though we could easily “afford it” but didn’t really need it- even things as small as a Tims coffee or pizza at lunch instead of brown bagging. We never feel pressure by this even though we were/are often in much better position to spend than present company. We understand this might not be suitable for everyone but has worked great for us.

    Our choices through the years allowed us to have a great lifestyle while working, and a continued comfortable one now in early retirement. The financial cushion and ability to be flexible (security priority) even allowed us choices through a significant career/financial disruption/downturn. We’re thrilled with FI and thankful to be here.

    Reply
    1. My wife is very good to offer me a different perspective! She has become rather passionate about FI and wants to see us get there sooner than later. We’re quite aligned in our goals actually.

      We budget from the perspective that we forecast expenses, not hold ourselves to a cash jar for gas, groceries, and other bills ala Gail Vaz-Oxlade. I couldn’t do that. I’d go nuts.

      We basically pay ourselves first and the money leftover we spend however we want. We share your view I think: we don’t buy something unless we couldn’t pay cash for it. This is why when I wrote “we can’t afford it” sometimes this is very true, we can’t, without taking on more debt.

      I suspect many people feel debt is normal and “affording it” just means you borrow more money. I don’t have the same mindset. You can either pay for things with the assets you have or you can’t.

      You seem to have things “set” Deane and all the power to you for getting there.

      Reply
  11. I never use the “We can’t afford it” line. I do however use the “It’s not in the budget” line. Most everything is budgeted and spending is allocated to various categories. Once I’ve used up a budgeted amount I will try my darnedest not exceed unless absolutely necessary. Of course there is some discretion but if a person sticks to his/her budget it makes it easier to refrain from overspending.

    Reply
    1. I actually don’t mind using the “we can’t afford it” line. That wrong Lloyd? If it’s not in the budget…does this mean you cannot afford it?

      As a verb, “to be able to meet the expense of” I see it as the same way.

      You sound very disciplined financially and more so than me but we also try our best not to exceed our budget unless necessary.

      Reply
  12. Mark, it sounds like your wife is a wise woman and you must make a powerful pair. Kudos to you both for keeping your eyes on the ball and the pedal down.

    Beyond saving a good amount, and not frittering money we were actually very free with spending on what we wanted. The frugal thing became almost a fun game with some things and still is, so that we can be extravagant with others things of priority.

    I think our styles sound similar based on what has been discussed. We also forecast expenses and especially for the $30.5K traveling we’ve done in year 1 of retirement. I’m pleased our travel spending is within $1000 of my “forecasted” expenses and to the good as well! I go crazy tied to exact spending and not having freedom. I’ve always had a lot of freedom/control during employment and with compensation, and as an entrepreneur myself. We’ve never really used the term “can’t afford it” since we’ve generally lived below our means and have simply purchased and done everything within reason that we’ve wanted. Two good careers for most of the time have helped allow choices. We could have been much further ahead had we been even more disciplined with spending/saving and less extravagant but don’t regret living well. The pressure to keep up with the Jones means absolutely nothing to me if I also can’t be debt free, with a significant net worth and be on track to reach FI at an early age. Fortunately it worked for us.

    Reply
    1. She is wise and I’m very lucky…

      I think this is the thing I’ve learned over the years – if we pay ourselves first, kill the mortgage with fairly aggressive payments, we can spend money that is leftover how we please. Update the house, travel, dine out, buy nice wine, etc. It’s all good living after you take care of the basics. Could we save more? Oh for sure but that wouldn’t be balanced and we wouldn’t have as much fun.

      Life after all is for the living and we’re doing a good job of it.

      I look forward to more of your comments and insights how you got to where you are. $30k per year is a healthy travel budget we aspire to 😉

      Reply
  13. 100% agree with that approach. Live for today and plan sensibly for the future.

    I suspect year 2 travel budget will top year 1 although we may have to clamp down on further increases!

    Reply
  14. I’m with Lloyd. We use our values to make a budget and set financial goals (monthly and annually) and I track our expenses at least weekly. it isn’t hard to do and with spreadsheets set up for Income/Expenses and Cash Flow it just takes a few minutes each time and I can forecast months in advance where we will be or what effect an extra expenditure will have. Before we did this, our money melted away practically without us noticing and ‘stuff’ accumulated. We always lived within our means and paid credit cards off in full every month but not a lot of savings to show for it all. By budgeting I think we enjoy a better quality of life and our net worth is growing steadily. I used to say ‘We can’t afford it.’ and yes sometimes friends would argue that with us. Then I realized actually we can afford it but choose different priorities based on our values. Since I started saying, “It isn’t in this month’s (year’s) budget.” I’ve had no arguments. In fact, some friends are now coming to us for financial advice!

    Reply
    1. Good to hear from your Patricia on this.

      We budget by forecasting expenses every two weeks for multiple months in advance. We have a simple spreadsheet that highlights cash flow in and cash flow out, making sure there is a surplus every month. I really don’t see a problem saying “we can’t afford it” because the money is already ear-marked for other things or has already been spent for something. It means we would need to buy items on credit or dip into our investments to pay for things. If you have to use credit for something, it means you can’t afford it.

      Reply
  15. Thanks, Mark! I think we are on the same page with this. I certainly wouldn’t go into debt or deviate too much from the budget (there is some flexibility in it) for a ‘want’ so in that context I see your point about saying ‘we couldn’t afford it’. In our circumstances, we worked for a long time in an industry where everyone knew approximately what everyone else made. So they would argue with us if we said we couldn’t afford it (how can you not afford it – you must be making over $XXX), but not if we said it wasn’t in our budget! Interestingly, We have since left those jobs (my husband retired and I opened up my own consulting business) and moved into a Vancouver townhouse in a nice area. I’m sure our neighbours thought we were poor because while they drove multiple Lexus, Audis and Mercedes we had a single car shared between us and our daughter, and it was a KIA sedan. But by sticking with the basic financial strategies of living within our means, following a budget, sticking to our values and not those around us, and having a plan we developed ourselves, eight years later we have a healthy net worth and a high-end vehicle (still just one, and intended to last for years) paid for in cash. Our neighbours – well many were caught over extended in 2008/09, lost jobs and investments, and are no longer here. They truly ‘can’t afford it’ in every sense of the words!

    Reply
    1. I think we are. If I have to dip into credit or my long-term investments for something, I really cannot afford it.

      There is also the consideration about “can’t affording something” via the choices you make, where and when to spend your money.

      Lastly there is the context basic food, shelter and other needs cannot be afforded – under the “can’t afford it”.

      This where I feel everything has a context but I can appreciate not all people understand words have a context let alone respecting a personal perspective on things. Such is life – everyone is different and that can be a very good thing!

      I drive an old car, we don’t have cable and I don’t buy a lot of new clothes. I’m sure some of our neighbours think that’s odd but I really don’t care. I don’t live my life for them and I hope they would never do the same 😉

      Congrats on your financial success Patricia and thanks for reading.

      Reply
  16. It’s not just the bank that wants you to save money. It’s anyone who stands to benefit by using your money, “managing” your money, advising about your money: pension plans, investment companies, mutual funds, 401k administrator companies(increase your contribution now, for your own good!!), stock brokers, annuity companies, life insurance companies(it’s a savings vehicle, yeah, right!).

    Reply
  17. Great post!

    Every time I catch myself saying “we can’t afford it” I tend to immediately follow that up with “or rather, we have chosen to spend our money differently”.

    It sounds like your family is very conscious of how you spend your money, and as a result your spending is closely aligned to your values/priorities. I don’t think that the same is true of everyone – there are many people who spend less consciously, live paycheck to paycheck, and find themselves unable to afford the (big) things that they really want, because they spent all of their money on (small) things that are less important.

    Reply
    1. We spend money rather freely but we are selective in where and what we spend it on. So, in that respect, we try and spend money in alignment to our values/priorities. Thanks for the comment Michele.

      Reply
  18. Totally! My husband often laughs at me when I say, “sorry, we can’t afford to do that.” He looks at our accounts and reminds that we can afford to do it, we would just rather save our money then spend it that particular activity. We are very careful with money because we love to save, hate to waste and are aggressively working towards early retirement. But, I still think there is nothing wrong with not being able to “afford something” even though you have money in the bank!

    Reply
    1. I feel the same Jess – to me – it’s about choice and “if you can’t afford it” whether you have already earmarked the money for something else, you need to dip into credit for a purchase or it’s simply not in the budget doesn’t make this statement wrong; it’s just a matter a context.

      Reply
  19. I agree that it can be taboo to say ‘i can’t afford it.’ There are also other social implications. I think some acquaintances/friends would hesitate next time they want to grab a bite to eat. Especially if the answer is: we want to spend our money elsewhere. I say this because I find myself wanting to say it, to be honest, but not saying it out of fear for retribution or something from friends. Not sure if that made sense at all. Anyways, I wish I were stronger!

    Reply
    1. Oh it’s definitely taboo to say it (amongst friends for sure) but I’m saying it shouldn’t be. For most people it has a context that you have no money to spend when in fact you do, however you are making different choices with that money or that money has already been earmarked for other things deemed more valuable to you. I don’t think that makes it wrong but I can appreciate not everyone sees things this way. Thanks for stopping by.

      Reply
  20. I like to say we choose not too spend our money on this or that. It seems to show more of a choice. I can afford to do that but choose not to in favor of something else.

    Reply
    1. Fair point. For me, it’s all about context. I have no problem if people say they can’t afford something (they have their money earmarked for other things) but I can appreciate this is taboo for some.

      Reply

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