What’s Your Financial Flinch Point?
We’re not quite halfway through the month, but I’ve already managed to spend the majority of my discretionary income for October (more on that tomorrow). One charitable donation, one medical bill for the part of my July Well Woman exam that wasn’t actually covered by insurance (yes, that happened, and why does it always happen), plus some warmer clothes and shoes, and I’m looking at my Mint account and thinking “how do so few expenses cost so much?”
Which brings me to a recent article from Racked about retail flinch points. Lauren Sieben writes about needing to replace some bras and spending $200, because, yes, that’s what a few bras can cost these days. She tells herself that it’s okay to spend the money because her old bras no longer fit, but she still feels guilty:
Two hundred dollars. At one time! On something that nobody will even see! I had officially surpassed my retail flinch point: the moment when a purchase turns painful, requiring significant effort to justify the expense.
I’d expand the retail flinch point to include pretty much everything that costs money—the rent flinch point, the health insurance premium flinch point, the groceries flinch point, etc. (Remember that most of my Doing Money interviewees think they spend too much money on food.)
In my case, spending $85.13 for six clothing items didn’t feel flinch-worthy—not even when I learned that I could have saved a few bucks by buying on Wednesday instead of Monday—and spending $101.97 on one pair of shoes, one pair of boots, and six pairs of socks didn’t feel flinch-worthy either. I was glad that I was able to find a new pair of boots for only $69.99, especially because my four-year-old boots had started to fall apart! It felt like a necessary purchase.
But when I look at everything all together and see just how much of my budget it takes up, that’s when I flinch.
Sieben cites Nobel prize-winning economist Richard Thaler and his theory that we spend irrationally because we focus on the cost of our individual purchases rather than the cost of our combined purchases, and while I’ve been using budgets for long enough that I am always thinking about the cost of my combined purchases, I get it. Spending $200 on bras feels like too much, and spending $69.99 on boots feels just fine, only because we’re not considering these purchases in context.
Sieben also notes that our sense of “what stuff should cost” often gets fixed in early adulthood, which means that those of us who spent the past ten years telling our parents “no, that’s what shoes cost now, that’s what rent costs now, that’s what a movie ticket costs now” also need to start telling ourselves the same thing.
Read the whole piece, and then let us know: do you have a financial flinch point? Is there a point at which you say “this is too much to be spending on this item,” and is that because you know it won’t fit into your budget, or because it just feels like more than that item should cost?