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Americans like to spend money, and they’re good at it. But they also feel kind of bad about it.
According to a survey from Ally Bank, three-quarters of Americans feel guilty when they spend money on something that brings them joy rather than putting it toward a long-term financial goal. I can confirm this feeling, especially after seeing my credit card statement after my last vacation. At the same time, the survey also notes that almost 70% say they spend “the right amount on joy.” Clearly guilt is part of the joy, which says something about the religious nature of American society that is beyond the scope of economics.
Still, as an economist who specializes in retirement saving, I try never to lose sight of what the purpose of saving is — and it’s not necessarily delayed gratification. The goal is to spread joy evenly across your life. Since earnings increase over time, in theory you should spend wildly and go into debt when you are young, save lots when you are in middle age and earnings peak, and then spend down your savings when you retire. Through it all, you should spend roughly the same amount on what brings you joy. Sure, maybe you skip a few nights out in anticipation of future joy — a trip to Tahiti, say, or a kitchen renovation.
Continue reading the entire piece here at Bloomberg
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Allison Schrager is a senior fellow at the Manhattan Institute, a contributing editor of City Journal, and a Bloomberg Opinion columnist.