We all want to be financially responsible, right? That’s why we’re here! But are there times when you really should just go ahead and spend money? Are there times when it’s actually the right choice to prioritize spending over saving?


Let’s talk about spending strategically. When should you splurge?

Number One: When you are just starting your career, and you have a big student loan balance, it’s not a great idea to pay it off as fast as possible.

So here you are, just starting out in the real world. And if you are like a whole lot of people, you are starting off with a load of debt. Now hopefully it’s just student loan debt, and not credit card debt on top of the student loans. If it is just student loan debt, then the smart thing to do is just pay the minimum until your income goes up.


Because right now your loan balance compared to your income is so large that it is pointless to try to really make a dent in it. You won’t be able to do so without starving yourself. Interest rates on student loans are somewhat high, so eventually you will want to pay them down. But you won’t really get to that stage until you are also at the stage where you are considering buying a house and contributing significantly to your 401(k) plan. For now, go ahead and spend money.

Number Two: When you are young and buying your first car, there is no need to put down a big down payment.

I strongly advise people to avoid buying new cars. They depreciate immediately, and it is certainly possible to purchase used cars that have been well-maintained. (Buying used cars from rental companies is a great choice for people that are concerned about a car’s maintenance history, and who don’t want to have to bargain with a used-car salesman. It’s what I do.)

However, I also don’t recommend that people just buy junk. If you need to buy a car at all (and if you live in a city, then maybe you don’t need a car) then you should buy a car that isn’t going to break down all the time. You should buy a car that you can have confidence in and that won’t fail on you while you’re driving. Your safety should not be something you skimp on. That isn’t frugal. It’s foolish.

And that means that, for many people who are buying a car, the smart thing is to not put as much down as you possibly could, even if it means a higher interest rate on the car loan. Now I am talking here to younger people who are beginning their careers and have a reasonable expectation of a rising income. I’m not talking about people who are my age and in the middle of their careers. If you’re in your forties, you probably shouldn’t buy the car at all unless you can pay for it in cash. Otherwise, downsize your luxury expectations for your vehicle.

But for young people who are starting out and need a decent car, it might not be the best idea to put down the biggest down payment possible. Just make sure you’re being honest. Do you really need a car?

Number Three: You should own some nice clothes for events.

Now there’s a danger here because, for a lot of you, your favorite way to waste money is to buy clothes you don’t really need. But some of you also are a little too frugal when it comes to your appearance. The reality is, you’ll be judged by how you look. And the other reality is, you will need to have at least some nice clothes for events where your appearance matters.

No, you don’t need twenty pairs of dress shoes. But you do need one pair of really nice shoes. You may need them for an interview, for a funeral or for your best friend’s wedding. It really sucks to show up to an event like a wedding feeling like you don’t belong there.

Just remember–you only need one pair of really nice shoes.

Number Four: Sometimes, taking your friends or colleagues out for dinner is a good investment.

I still remember the first time my parents and I went out for dinner and I paid the bill. It’s one of the very few meals I’ve eaten where I can remember exactly what I ate, exactly where I was sitting, and exactly how people reacted when I paid the bill. This was literally the moment I felt like a true adult for the first time.

I don’t suggest you do this very often, and I would caution you against showing off too much. But people really do remember when you do things like taking them out to dinner or lunch, especially people who are “just” your colleagues. Meals are where a lot of networking happens, and it’s where a lot of people form their real opinions about those they know.

So once in a while, even when you are young and fairly broke, I encourage you to take your friends out. You’ll remember the experience. They probably will too. And in business, it can be a wise long-term investment.

Number Five: A decent computer helps.

This is another dangerous one because a whole lot of you have a favorite way of wasting money. You love to waste money on tech. You just have to have the newest phone and the newest gadgets to go with that phone.

But again, one good computer can be a real help. I remember when I was much younger and struggling as a musician. Probably the single best opportunity my band had we lost because it took me too long to respond to an email. (In music, a lot of gigs are literally determined by who responds immediately to a text or email.) I couldn’t respond immediately because my old computer was crap and I had to go to libraries to send emails.

I’ve never forgotten that experience. You don’t need the latest and greatest tech, but in today’s world you probably do need at least one highly functioning piece of technology.

Number Six: Investing in your human capital through education, workshops or professional organizations is often worth it.

There’s no need to focus here too much on education. Many of you who are stuck with student loan debt probably don’t want to hear that anyway. But I would like to briefly pipe up and say that belonging to professional associations, like the Washington Association of Accounting and Tax Professionals, has really benefited me. If you stick around, treat other people well, and help out the organization, you will gain connections. Those connections might be there for you precisely when you need them the most.

Remember that in business your connections matter at least as much as your skills. Making connections is one place where you don’t want to be too frugal.

Number Seven: Your health is more valuable than money.

You’ll notice I underlined this one.

Here’s a lesson from my 41 year-old self to my 21 year-old self:

It’s easier to make your money back than it is to get your health back. For the love of God, buy dental floss. Eat healthier. I think if I could force my past self to do one thing differently, it would be to eat healthier. The money I “saved” by buying junk food was absolutely not worth it. In the end, it cost me far more than I saved.

So there you go. Strategic spending in a nutshell. There are times when you should go out and spend some money. Most of them have to do with maintaining your health and maintaining your friendships. Take care of yourselves!