Clients often tell me they feel they are being “judged” on what they spend. They feel like they need to support their “case” when making a large purchase. And, they often feel “guilty” afterwards.
Hmm… “Judging... cases... guilt...?” Sounds like an episode of a courtroom TV show! Let’s watch…
Welcome to "The Big Purchase - Should You Feel Guilty or Not Guilty?” starring Judge Shari Reiches.
Today’s episode: “The Case of the Awesome Bike”
The purchaser: Stephen Reiches, husband of Judge Shari Reiches.
The item: An awesome all-carbon gravel bike
The question: Should Stephen feel…Guilty or Not Guilty? Let’s enter the courtroom.
Bailiff: All rise for Judge Shari.
Judge Shari: You may be seated. Mr. Reiches. Today, we are here to decide whether your recent purchase of a new bike should cause you to feel guilty or not guilty. May I see the evidence?
Stephen: Really, Shari?
Judge Shari (slamming gavel): You will refer to me as Judge Shari.
Stephen: Yes Ma’am, I mean yes, Judge. It's awesome!. 100% carbon, disc brakes and Di2 shifters. (Hands picture of bike to bailiff, who gives to Judge Shari.)
Judge Shari: What about the receipt?
Stephen: Here, your honor. It was a steal at $2,500. It normally sells for…
Judge Shari: Enough. I get it. How did you decide that it was OK to buy a new bike?
Stephen: Well, for starters, my cycling buddies told me there is a formula for the optimal number of bikes to own.
Judge Shari: I can't wait to hear it...
Stephen: The optimal number is x + 1, where x = my current number of bikes.
Judge Shari: Really, Stephen? I am so close to declaring a guilty verdict, but I am going to give you one last chance, because, it is… an awesome bike. There are three things to consider when making purchases like this. First, do you set a budget for spending?
Stephen: Yes, I do. At the beginning of each year, I project my after-tax pay. I take this amount and set up a budget, including discretionary spending items and saving.
Judge Shari: Budgeting! That’s Step 1. So far so good. How do you know you are following your budget?
Stephen: Well, it’s a little bit of work, but I download all of my monthly spending into a spreadsheet, and make sure everything gets put in the right categories. I can quickly see if we are over or under budget either monthly or on an annual basis. And so far, we are right on track. The bike purchase fits in the “health” budget category.
Judge Shari: Tracking! Excellent. That’s Step 2. But there’s one more consideration when looking at spending. Step 3 is…aligning your spending with your--
Stephen (Interrupting): My Core Values! I’m a big fan of your blog, Judge Shari. I just read about Core Values last week. Excellent writing, by the way.
Judge Shari: I agree.
Stephen: I do try to align my spending with my values. Health, Fitness, and Adventure are high on my list. Riding helps me achieve all three. Plus, it gives my lovely wife some alone time in the morning to achieve that Core Value of Inner Harmony. Win, Win!
Judge Shari: Spare me. I have never mentioned Inner Harmony in my life. But I do have a verdict in the Case of the Awesome Bike. My decision as to whether you should feel Guilty or Not Guilty is…
Tune in next week for Judge Shari’s verdict. How do you think she will rule? How would you?
Shari Greco Reiches
Shari co-founded Rappaport Reiches Capital Management with one goal - to maximize the return on life for her clients. Please connect with Shari below. She loves to talk about investing, financial planning, and Barry Manilow.
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