Splurging and Saving in the Eye of the Beholder

We all know someone whose spending habits we just don't get. Maybe it's the friend who won't pony up for a new outfit but is always asking you to join her at expensive restaurants. Or perhaps it's the neighbor who joined a pricey country club yet drives a car that rolled off the assembly line during the first Bush administration.

When it comes to spending money, we all value things differently, which is what makes the question of where one chooses to save and where one chooses to splurge so interesting. We put this question to Morningstar.com readers on our Personal Finance discussion board, and the answers were as varied as one might expect. The full discussion can be found here. Below are excerpts.

'Date Night Is Cracker Barrel' Many readers simply rattled off lists of things they enjoy splurging on along with areas where they don't mind watching their pennies.

For example, ridg0008 wrote, "We are in our 60s and in the early part of retirement. Splurges: a second home in Arizona, domestic and international travel (at reasonable cost, though), dining out, very good Irish whiskey (me), a dog (a rescue, but he gets good medical care if he needs it). Save: a 1950s ranch-style home (which, like the Arizona place, is paid for), low-cost cars that we buy with cash and keep for about a decade, golf at public courses rather than a club, no smartphones, computers that we use for as long as possible, credit cards paid in full every month."

When it comes to saving money, everyone had different ideas about how to go about it. Lizf57 shared several of her own.

"'Date night' is Cracker Barrel once a week. I pack my lunch. No cable TV. I clip coupons and never buy anything that isn't on sale," she wrote. "I drive my cars until they have 200,000 miles on them. I do not borrow money and do not have credit card debt, so I don't pay interest. I have lived in a very small house (1,100 square feet) for 20 years but socked away cash and splurged to pay cash for my dream retirement home in the beautiful red rock country of southern Utah, where I will be retiring in two years at age 60--young enough to enjoy it."

Many readers focused either on things or experiences for their splurges. Among the first group, the objects of their affections ran the gamut.

"Not into golf, country clubs, or lavish vacations, so no money spent there," said OldFyrFighter. "However, I do spend money on the three C's--cars, cameras, and computers."

Raven27936 wrote, "I'm considered an oddball in South Florida. ... Our mortgage is $650 a month on a modest ... 1,050 square-foot home. We drive our cars into the ground. ... No cable. No smartphones. My computer is always bought used. ... We love to splurge on food, unfinished wood furniture, clothing (Tommy Bahama is my weakness), vacations, daughter's college education, and saving for retirement/financial freedom."

Some readers said that paying more for quality items--what some might consider a splurge--can actually save money in the long run, or at least not cost anything extra.

Danielle wrote, "Splurges--I was going to say clothing and shoes, but in the end it's probably a wash as each unit of apparel lasts longer than the cheap stuff I used to buy. Although I guess no one really needs a $1,000 raincoat or $2,000 purse, I still love them and will keep them forever. Same with cars--yes, mine is a little nicer than most, but I do drive it for 10 years, then give it to one of the kids. Also, my spouse is into high-powered rocketry so he literally burns money. At least my purse will last me more than 30 seconds!"

One common area for splurging was food, whether prepared at home or eaten at a restaurant.

Reader louisniles said his family saved money by sending the kids to state universities on academic scholarships, that they drive their cars into the ground, and that his wardrobe "consists mainly of jeans, T-shirts, sweatshirts, flip flops and tennis shoes." But one of his splurges, he said, is to "buy [the] best quality foods available (sustainably raised, organic fruits and vegetables, free-range chickens, lamb, pork, and beef and dairy products from pastured cows)."

Retiree BobVermont said buying quality food is also a priority for him and his wife, although it's not his only splurge. "Perhaps the biggest splurge is I bought my dream guitar, a Fender Deluxe Stratocaster electric guitar," he wrote.

After years of buying used cars, reader JHAsheville reported buying his or her first new car last year. "[We] still save [money] by doing most of our yard work except for mowing as [it is] much cheaper to pay for mowing than maintaining all the requisite equipment," the commenter said. "So we weed, plant, fertilize and prune as needed. Downsized two years ago and have cut a ton of expenses. So for splurging we discovered golf and are having the times of our lives!"

'Save on Things and Splurge on Events' Other readers said that splurges on experiences were more meaningful to them than splurges on objects.

As g3org3 put it, "This might sound a wee bit simplistic, but we have always tried to save on things and splurge on events."

Reader roacher said his or her family still drives cars from the '90s with 160,000 miles or more on them. Among his or her many cost-saving measures are buying furniture only when it is on sale, never buying the kids the latest gaming systems, and clipping coupons. So, what does roacher splurge on? Good seats to Las Vegas shows, Los Angeles Dodgers baseball games, and Los Angeles Kings hockey games. "We only do a few games each season, but binoculars are not the way to watch a live game," roacher wrote.

Of course, travel was another high-priority splurge for many readers.

"We splurge on vacations and eating out at nice restaurants," wrote BMWLover. "We enjoy our travels and feel that they are our rewards to ourselves for our hard work. ... When we save we don't necessarily cut back on things, but we are conservative in our spending. That includes buying food and other items that are on sale and stocking up. If we know we're going to use the items then it makes sense to take advantage of discount pricing when those things are on sale. "

But even among dedicated travelers, the places to save and the places to splurge weren't always unanimous.

Reader JerryK wrote, "Unlike most others, I prefer relatively expensive hotels. I'd rather have a shorter vacation at an expensive hotel and eat at expensive restaurants than take a longer vacation at cheaper hotels/restaurants. To me, I won't enjoy the vacation if I end up complaining about the hotel. I do not fly first-class or business class. I can afford it, but it seems like such a bad use of money. I can't do it."

Another way many readers said they are able to save money involves technology, and in particular not buying the latest, greatest gadgets. Reader gtoerr said doing so helps fund his lifestyle splurges.

"I save by avoiding expensive toys and not being an early adopter of technologies," said gtoerr. "I must have been the last person in the country to buy Internet access, a cell phone, or a flat screen TV. I splurge by living in the city I love--high cost of living be damned! I also splurge on live entertainment and on time-saving services (like a domestic cleaning service). I have only so many moments allotted to me in this life. If I can pay someone else to perform a necessary task that I take no joy from, that adds more to the 'loving life' side of my ledger."

'Material Things ... Are Kind of Pointless' A few readers offered their own unique takes on the save-splurge equation.

For example, FD1000 wrote, "We keep it simple. Save about 15-20% and almost never touch it, pay all loans and credit cards in full every month and the rest. We spend ... on restaurants, travel, new vehicles, clothes and shoes, whatever, but I find great deals and we don't buy anything expensive, just good, reliable, and affordable. We don't see the point of saving almost everything for retirement and do[ing] very little until then."

A few mentioned splurging on their pets and living spaces.

Reader pavlov, an avid swimmer, said he or she spends money on three dogs, a house sitting on 30 acres of land, a YMCA membership, and "one great vacation a year. Last year hiking in the Grand Canyon. This year hiking in the Italian Dolomites." To save, pavlov buys things on sale, rarely eats out, and doesn't have a smartphone or "i-anything," the commenter wrote. "I live simply but well."

Hobocon also keeps animals--in his or her case, five horses, three golden retrievers, plus "a few barn cats." To save money, the commenter said, "We do all of our domestic work indoors and outside ourselves. We raise a lot of our own food in the family garden and can some for the winter months." This leads to one of his or her favorite splurges: Thanksgiving with about 40 people. "Maybe the best things in life have a very reasonable price!" Hobocon wrote.

Other readers also mentioned the importance of spending money--splurging, if you will--on the people who mean the most to them.

"I live frugally," said SeanDWB. "Time with friends, loved ones, occasional vacations with people, eating dinner with someone, having an extra drink at the local neighborhood bar so I can catch up with a bartender friend, visiting the far-flung family, giving to charity is where I splurge. Material things, for me, are kind of pointless and of limited value."

For bubbygator, spending money on the grandkids is a splurge in itself.

"I grew up in a poor home--my father was a laborer at a rubber plant," he wrote. "But my father inspired me to get educated and make good. So, I splurge on my grandchildren. I make sure they don't 'want' in early life, buy them a car for their 16th birthday, help them with high school and college expenses. My late-life 'saving' is done by sitting on my butt making money in the market instead of spending money on 'things.' I think my last vacation was 16 years ago."

Some comments have been edited for clarity and brevity.