Writing Your Daily Personal Spending Policy

Epidemic of Upsizing

In our country today, everyone is looking to upsize you. The restaurants, the car dealerships, the

Talk about Upsizing!

grocery stores, the electronic stores, amusement parks, travel sites, and even charitable organizations want to make you spend more.  We are constantly bombarded with “opportunities” to get a better bang for our buck.  A Daily Personal Spending Policy Statement will go a long way in avoiding this deluge of temptation. 

Now I will admit that spending the least on everything we purchase is a bad life strategy. That will usually lead to the frequent replacement of inferior material items and more trouble and hassle in dealing with inferior services on vacations and experience based expenses.  

As high income earners, we have more exposure to other high income earners. A lot of these people are not frequenting personal finance and investment websites. They live paycheck to paycheck. They don’t give a second thought about where their money goes each month.  

We have business partners, colleague, and clients that live with little direction of their financial future, and they want to suck us into their world.


About 25% of those making over $100,000 a year still live paycheck to paycheck.

The Struggle is Real

I’ll give you an example of how this played out in my life.  My wife and I have always liked New York City. It is pretty much the opposite of living in Texas. We get a controlled culture shock with the opportunity to see things you can’t really see anywhere else in the world. Since we have been married, we’ve had the opportunity to go on a long weekend there twice thanks to Grandma’s taking over the kids.

Both times, we went with two friends, another doctor and his wife, no children.  They are great friends, we love them dearly, and at the time we didn’t have any true financial goals. This was in 2009 before I had found sites like Bogleheads.org or read The Millionaire Next Door: The Surprising Secrets of America’s Wealthy. I don’t know what our friends’ savings and retirement goals were at the time, but the wife wanted an amazing experience. They wanted the complete upscale New York adventure and my wife and me, not knowing any better, went along for the ride.


writing daily personal policy statement

Not our view from the Boutique Hotel

We stayed in a boutique hotel near Central Park at the tune of $550 a night. We had not only one, but two dining experiences at top-scale restaurants where the bill came to about $250 a person!  To make matters more expensive, we saw a Broadway show and paid for front row seats where you could see the sweat gleaming on the actors’ faces.  Oh, and we took a limo both to and from the airport.

I know, I know it is crazy.  Looking back, I can’t believe we did it.

Now was it fun? Heck yeah, it was fun! We were living like rich people, or so we thought.

Was it mortgage our futures and possibly our children’s educations fun?

I would say a resounding NO.

Did it set back our ability to retire earlier that a lot of my peers?

Well, honesty, it did set us back some. Every dollar that we spent that day will be worth 7-15 times what it was then, depending on when I retire.  A one-time splurge like this isn’t going to kill a high income earner. If a luxury adventure is on your bucket list for a weekend at some point in your life, put it on the budget and go for it. The truth of the matter is we didn’t need to spend that much to have a wonderful time. The truly best part of the trip was spending time with our friends. 

The Rest of the Story

A few years later we returned to New York, but this was after I had the advantage of the personal finance community investing in me through the amazing website resources like Rockstar FinancialWhiteCoat Investor, and Biglaw Investor. We went with the same friends, but this time I told them we wanted to do New York for the biggest value, not the cheapest possible, but what brought the most value to us.

By this time I had got a Chase Ink Card and had diverted a lot our spending to office supply stores to maximize points.  That paid for the plane tickets.  I found a hotel in the financial district that received wonderful reviews. It was $110 a night which is pretty cheap for Manhattan. It was clean and quiet and had an amazing bagel shop around the corner that made great Lattes and bagel breakfast sandwiches.

 We took the train in from JFK to Manhattan and got a free breakdancing show during the ride.  We hit up the TKTS booth to find discounted broadway show tickets and spent half on two shows for what we spent on the one show from the first trip.

writing daily personal policy statement

Pretty Much our View from the Second Hotel

Instead of high-priced dinner reservations, every time we were hungry, we whipped out the Yelp app and set it to $ or $$ and ate at the neared 4-5 star place within a few blocks.  We also split a meal or a snack at each restaurant. We ate at five or six places each day because we had small portions and wanted to sample a variety of cuisine.

 Our best deal was two huge containers of soup and some pot-stickers that fed all four of us for $11 at Prosperity Dumpling. (You should go if you can.)

We went to every free or discount museum and landmark we cared to see.  Just spending time in Central Park was relaxing as well. It was a wonderful time and the experience was just as amazing as the first time, if not more, in my book.


The first step is to Admit you Have a Problem

If you are like I was on the first trip and letting your friends or business associates influence your financial decisions, then STOP DOING THIS!  Make a decision right now to stop just going along.


Nice Ride

writing daily personal policy statement

Nice Ride

Every day I walk out of the hospital and see the doctors parking lot. There are BMW’s, Mercedes and even a few Porsches and Aston Martins (crazy cardiologists).

Those are extremely expensive cars, but besides the price tag, what else goes along with those cars? The insurance premiums are higher. The maintenance costs are higher.  They tend to have lower gas mileage.

“But hey, they are doctors or some other high income
earner, they can afford it!”

Not a nice Ride

Depends on what you mean by “afford”. If you mean they can make the payment, well maybe, who knows their debt situations.  If you mean they can still have luxury cars, luxury homes, luxury vacations, and luxury everything and meet all their other financial goals, I doubt it.  Having to work harder than you want to keep up with the payment of a luxury lifestyle like this means you can’t afford it.



Housing Financial Creep

writing your daily personal spending policy

What out! it will creep up on you.

How about the house? If you are a high income earner you must have the big fancy house, right? There is lots of advice on the rules to follow as far as budgeting for a house.  I’ve seen to budget 1% a year for the value of the home (Hmm, wonder why most homeowners insurance has a 1% deductible). I’ve seen to budget a dollar per year for every square foot.  You can add another 10%  to the amount for every decade the house has been standing. Add another 10% if you experience extremes of temperature or have frequent precipitation.

Also, the bigger the house, the more it cost to heat and cool the structure. Don’t forget, you have to fill that big house with
lots of furniture and decorations.  

There is more upkeep with a bigger house. You are a busy professional and your time is valuable. Desiring a housekeeper to keep everything in order is more likely to happen.  Everything adds upon itself.

If you are looking at buying a 4000 versus a 2000 square foot house, it is reasonable that you will spend double the maintenance costs on the bigger house over the long run.  Those extra two or three thousand dollars a year could be $143K in 20 years. That is a college education, maybe two or an extra $5000 trip/adventure a year for over 25 years during retirement.


Fitting in with the Crowd

Writing daily personal spending policy

Where are you?

Part of taking charge of your financial situation is to stand up and say you aren’t going to take the status quo anymore. If you have a constant onslaught of friends and family asking you to spend your money, be polite, but firm and tell them it isn’t within your financial goals.

There are lots of ways to continue on your financial goals and redirect people when they try to upsize you.

One of my favorites ways to fend off the request for higher spending is to point to a long-term goal. I say we are saving up for a home remodel or that ski cabin in the Rockies. It is true. I would like those things eventually after I have an adequate retirement account saved over the next decade.  Or if you want to appeal to their spendthrift side, maybe you are saving up for another vacation. The don’t know about credit card points anyway.


Invest in Friends

If they are really good friends and they know about my plan to be financially independent by the time our last kiddo is in college, I go into more detail about how we plan to achieve this. After about five minutes and their eyes glaze over, I stop. If they come back for more, I’m always happy to spread the word about achieving financial independence.


Your Kids could be your Ally or your Opponent

We all know that our children want instant gratification.  It is ingrained in all of us. This is where you come in as the parent and mentor. If you start teaching your children early that we don’t get what everyone else gets just because we want it now, this will go a long way in the future.

Start giving your children parameters on their spending.  I think an allowance is a great way to start them on the way to managing finance. As they get older, set limits on what they can spend. Talk with them about how certain activities are funded.  If you daughter wants to try out for the cheerleading squad, talk about the cost of uniforms, competition trips and where that fits into the family budget. Make her an active participant and include her in the decision-making process.  Give your children examples of how spending this money now will inhibit it from growing in the future.  Investment calculators are great for this. If you have invested in you kids early about responsible financial management, this will come second nature to them as the mature into adults. 


Family Opportunity

This gives you opportunities as a family to brainstorm and come up with ideas where they could fund the project or activity they want. Do you hire out your lawn to be cut? Could the child do that?

Is there an aspect of your business that you usually pay for that your son could fulfill.  I earned a lot of money growing up asking for jobs. I worked doing landscaping and other outdoor projects for my extended family and people at church.  If the child works for the ability to participate in extracurriculars or make a large purchase, he or she will appreciate it all the more.

Once they get in the mindset, the children will hold you accountable for purchases you make or activities you wish to pursue. They will be another check and balance in the system.”

Daddy, Do you really need that brand new $3000 bike that you will ride for 6 months and then never see again.


Write Your Daily Spending Policy Statement

Just like we should set up an investor policy statement, we should set up a Daily Spending Policy Statement. You don’t have to write it out, but I think it helps to have it sitting in front of you.  Since this whole website is directed toward parents, getting on the same page with your spouse and your children (if they are old enough to understand) is also essential.

My Daily Spending Policy Statement:

  1. Do I need this to increase my happiness or to benefit someone I care about in the long run?

    • Is that fast food stop really going to make you happy when you know you will feel bloated and heavy in a couple of hours? You usually have leftovers ready to heat up at home or even made something healthy in about the same time as stopping at a burger joint. 
    • This pertains to those little impulse splurges that add up.
  2. If I wait to do more research could I get a better deal?

    • This is almost always true on a larger purchase.  Impulse buying, or buying with little knowledge will lead to overspending.  Make sure you know the ins and out of whatever you are purchasing.
    • Also, often times you can find a larger purchase item with discount codes and/or portal payouts online.
    • I ask, “Can I get a recommendation from a trusted source?” This will save tons of time and energy, and allow for more long-term satisfaction.
  3. Can I use something that I already own to accomplish the same goal?

    • I’ve done this a hundred times rummaging through the workroom and using leftover lumber or pipes from previous projects.  My wife does this all the time with school projects with the kids.
  4. Will I get a better value if I spend more now and potentially spend less later?

    • Sometimes it is beneficial to pay more now for a better product or a more talented service provider. This takes judgment, but including this in your thought process will bring you more value.
  5. Resist the urge to give to charitable organizations or pay for “add-on” just because the salesperson asks right then.

    • If you are like me when a person steps up and asks for a donation I feel terrible not giving one.  The problem is I would feel even worse if I gave to something that I disagreed with or managed my contribution in a wasteful way. How can I know this if I don’t investigate? That is why I am as intentional with my donations as I am with my daily spending.  I’ve explained this to several people when they ask for donations, and they are disappointed, but also understand my reasoning. 
    • As for the “add-ons”, I can’t think of a time when adding the extended warranty on a purchase is worth it in the long run.  We should be self-insuring for things like this or buying on a credit card that doubles the manufacturer warranty.  Keeping track of all these things and actually getting a company to honor them is a job in itself.  

Take Action

So are you ready to write down your daily spending policy statement? Have you talked about this with your significant other? Do you involve your children? What would you add to my statement? Comment below.

Tom is a doctor, husband and father of five with a passion for parenting and finance. When he isn't skateboarding, riding BMX, or jumping on the trampoline with his kids, he is reading and writing about personal finance. He helps high income parents educate and mentor their kids to become financially, emotionally, and intellectually self sufficient.

2 Responses to “Writing Your Daily Personal Spending Policy

  • It is quite amazing how we are presured to spend at every turn. Constant upselling or allure of the next have to have product. Think of all the “things” that are prevelant of must haves that did not even exist 5, 10 or 20 years ago. Do we really need them?

    • It’s constant pressure for sure. It’s something I preach to the kids that we he have to keep in mind.

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