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Why do we seem to instinctively want to spend "extra" money that comes in?

Zenmervolt

Zenmervolt

Elite member
I just got my quarterly bonus notification (at my company bonus payout is quarterly and Q4 '06 will hit our accounts on Friday) and the first thing that went through my mind was, "Cool, what can I buy with this?". Now, I very rarely actually spend the bonus like that, I usually just put it into savings, but the first thought is always about what I could spend it on.

We see this every year with tax refunds too. Even though everyone knows it's not a "gift", it's still a seemingly instinctive response to at least think about what we can spend the money on.

This all got me wondering just why it is that there is this temptation to spend "extra" money. It seems almost universal (I'm sure that there are some out there who aren't tempted, but it seems that even those who know better and who don't end up blowing their whole bonus every time are still tempted to spend it even though they don't.)

I think that part of it is planning, we're never sure of what our bonus will be until right before it's paid, so I always leave it out of my budget calculations when I make my bi-weekly budget. Same with my tax refund (though my refund is usually small, I try to keep it as small as possible). So, since we aren't accounting for any influx of money, it initially feels like a "gift", like something that we can spend just because we know we're solid even without it.

Thoughts? Ideas?

ZV
 
Originally posted by: Zenmervolt
I think that part of it is planning, we're never sure of what our bonus will be until right before it's paid, so I always leave it out of my budget calculations when I make my bi-weekly budget. Same with my tax refund (though my refund is usually small, I try to keep it as small as possible). So, since we aren't accounting for any influx of money, it initially feels like a "gift", like something that we can spend just because we know we're solid even without it.
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I agree. Any budget and/or savings schedule I create is based on my and my wife's regular bi-weekly income and does not account for gifts, bonuses or tax refunds. As a result, these "unplanned" influxes feel like gifts.
 
If someone gives you a bonus, you feel rewarded. Seeing a slightly higher bank account balance usually doesn't give people the "reward" feeling that they are looking for.

I don't get a bonus, but my small tax refund will go toward reducing debt. That's my way to keep from spending it.

 
maybe it's the temptation of the freedom to purchase something you want as opposed to living in the repression where you only purchase things you need.
 
I don't. To me, there is no such thing as "extra" money. It's all income no matter what form. If I were to treat tax return, bonuses, etc. as "extra" income then I might as well start doing the same for the returns on my investments. You don't get very far with such a lack of parsimonious thinking.
 
it's hard to resist human nature, but if you are disciplined enough you can get really good at saving. I want to save enough so I can buy my own house one day in full. I will never reach that goal by buying things I don't need, like another mp3 player or a digital camera. Sure, they are nice, but I am perfectly fine without them.

edit: typo
 
Whenever bonus time comes around I automatically split the take up regardless of size.

30% to long term investing
40% to short term investing
30% to something material for me 😀





 
I had a small bonus, I spent half of it, and left the other half in my account to make up for the overspend at Christmas, so I was back on track financially.
 
Originally posted by: blackdogdeek
maybe it's the temptation of the freedom to purchase something you want as opposed to living in the repression where you only purchase things you need.
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There's a hell of a lot of difference between only purchasing things you absolutely need, and having a balanced budget that accounts for savings goals as well. Look at my sig, if I only bought what I "need" and were "repressing" myself I sure as hell would not be driving those cars.

Saving the money now will prevent buying a new camera lens or body (short-term loss), but it will help me save for a house (long-term gain). Discipline to achieve long-term goals is not repression just because some (not all) short-term whims have to be denied. In fact, you are long-term more "repressed" if you spend "extra" money because you impose large constraints on your long-term financial state.

Originally posted by: Descartes
I don't. To me, there is no such thing as "extra" money. It's all income no matter what form. If I were to treat tax return, bonuses, etc. as "extra" income then I might as well start doing the same for the returns on my investments. You don't get very far with such a lack of parsimonious thinking.
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Precisely. That's why the "extra" is in quotation marks. I don't treat it that way either, but I'm always tempted to do so, and the thrust of this thread is a curiosity around why the temptation is there.

ZV
 
I don't think everyone that is a spender is stupid.

To me, I just don't care enough to be fickle with my money. I make it, I spend it, whatever. There's no sense to me in having thousands in my bank account that I don't spend. You can't spend it when you're dead.
 
I don't get a rush from shopping and maybe that's why I end up saving my bonus money. Also, I don't really want any more stuff.

We end up using it for vacations mostly.
 
Even if I have $ coming from some other source, I still try to buy things that are on sale. For example, just got a Treo 700WX for less than $50 if the rebates go through 😀
 
I wish I has this kind of talk drilled into my brain at a younger age. I am paying for it now. Slowly getting things turned around. It is very easy to spend spend spend. Much more difficult to save.
 
Originally posted by: meltdown75
I don't think everyone that is a spender is stupid.

To me, I just don't care enough to be fickle with my money. I make it, I spend it, whatever. There's no sense to me in having thousands in my bank account that I don't spend. You can't spend it when you're dead.
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Since I don't know excactly how long I'm going to live that's kind of problematic. I don't want to find myself destitute when I am no longer able to work but continue to live.

Just because you are planning for retirement doesn't mean you can't spend anything. The earlier you start the better off you are and the less painful it is.
 
I always, without exception, blow my bonus on fun things. I expect my year end bonus this Friday or next. 😀
 
Originally posted by: meltdown75
There's no sense to me in having thousands in my bank account that I don't spend.
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So if the company you work for goes out of business tomorrow and you lose your job, can you still support yourself?

I look at it like this, I don't like to work. I mean, I like my job, I like my co-workers and all that, but given the choice, I'd rather not be working. So, by saving now, I can retire earlier. By being disciplined, I can retire possibly without debt as well. That way I get to indulge my hobbies sooner and have a more enjoyable life. I don't go nuts with work right now, and I do like to have my toys (see sig), but I feel it's important to plan rather than just spend.

Live for today, but be prepared for tomorrow.

ZV
 
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