Typically the financial choices we make at different times in our lives all impact one another in a pretty obvious way. In other words, my net worth at this moment is largely a culmination of past choices I’ve made about spending and saving and borrowing and investing. That’s kind of the underlying principle of personal finance, right? I could even argue that if I hadn’t bought that $7 Jamba Juice last summer, I would have $7 more in my bank account right now than I actually do. And in the personal finance sphere we talk a lot about trying to make better choices with our money, such as saving and investing our discretionary income instead of spending it on Jamba Juice.
But here’s a thought experiment: what if the universe handed you a little pocket of time during which you had to spend ALL the money you earned…or lose it? No index funds, Roth IRAs, or 401(k)s allowed. Just spending. How would you spend it? What would you choose? And what might it teach you about yourself?
This happened to me once. And here’s what I chose.
When I was 25 I moved to China* to be an English teacher. I had $1000 in my American bank account when I arrived and knew about 17 words of Chinese. This may sound like it was a risky move, but honestly it wasn’t that risky—I had a round-trip ticket so I knew that if I ran out of money I could easily go back home, and as for the language barrier, a lot of people in my new city spoke some English. I spent my first 30 days taking a crash course in how to teach English, and I easily found a job and an apartment within a week of finishing the course.
Now, one weird thing about teaching English in China as a “foreign expert” (i.e., a native speaker) is that you get paid a confusingly high amount of money by Chinese standards, or at least you did in 2006-2007 when I was there. I’m certainly not suggesting that teachers in general shouldn’t be paid a lot—because they definitely should—I’m just saying it’s strange that a 25-year-old whose sole “teaching” qualification was that she happened to learn English while still in diapers was getting paid a roughly similar salary (or so I was told) as a college professor who had been working hard in his field for years. I didn’t feel good about it then, and I don’t feel good about it now, but there it is. It wouldn’t have translated into a huge amount of U.S. currency given the exchange rate, but it was a pretty decent amount in China: I was definitely being paid a lot more than I needed in order to live from day to day.
Another weird thing about my paycheck—and this is key to the “spend it or lose it” situation – was that there was no way for me to bring any of the money I was earning back to the U.S. when I left. There were strict limits on the amount of random cash that could legally be exchanged into dollars by one person, and my boss, in an effort to avoid the time and expense involved in procuring a visa for me that would allow me to open a Chinese bank account and legally exchange higher amounts of currency, insisted on paying me only in cash. On payday I would go to his office, where he would count out a gigantic stack of 100 RMB bills (the largest denomination there is), hand them to me, and say, “Now, go straight home.” I would divide this huge wad of cash up into several smaller wads, stuff them into my pockets, hop on my bike, and hide the cash in little piles underneath the shelves in my wardrobe as soon as I got back to my apartment.
So in terms of the space-time continuum of personal finance, this meant that my earning and spending habits while in China were effectively an entity unto themselves. No matter what, I would leave the country with the same net worth with which I had entered it. Of course, if I hadn’t gone to China in the first place, I could have earned and saved some money at a job in the U.S. during that period, and so you could definitely argue that that choice alone had an impact on my net worth today. But given that I did in fact choose to go to China, this was the result:
Now, this all happened long before I started to become financially conscious, so at the time my reaction was, “Cool, look at all this money I get to spend!” —which means that I did exactly what I wanted with the money, without worrying about what I “should” do with it. And this offers a really valuable insight, I think, into what was (and is) important to me, because people generally spend their money according to their priorities, whether they consciously realize it or not.
I was in China for ten months. Here are some expensive things I easily could have spent money on during that time, but didn’t:
- tailor-made clothing (very popular among tourists and ex-pats)
- Chinese art (as with all art, this can get really expensive really quickly)
- specialty groceries from the Western grocery store (we’re talking imported Oreos for like $8 a package)
Here’s what I did spend it on:
- restaurant food or takeout pretty much every evening for dinner
- some sweaters and a coat because there was no central heating anywhere and I was FREEZING.
- a DVD player and approximately a gazillion DVDs
- a month-long trip with friends around China and Tibet. This was really where the bulk of the money went. I spent it on hostels, hotels (for whenever the unheated hostels were too cold), train tickets, bus tickets, airfare, hiring a driver to take us to the base of Mt. Everest, and, finally…
- a LOT of yak butter tea. Yak butter tea is the best thing in the world. Like, it’s tea + butter! And it warms you up in Tibet in February! Amazing! I bought and drank it at practically every meal during that part of the trip and it was SO WORTH IT.
In looking at this list, I’d say my priorities involved food, entertainment, staying warm, and traveling. This all still resonates with me. I still love eating out in restaurants. I still generally have a lot of trouble staying warm. I definitely remember that watching American and British movies helped me to feel less a lot less homesick. And if I can ever get my student debt paid off and my retirement accounts looking a little healthier, I will definitely be doing some more traveling.
The main thing that’s changed since my China experience is that saving and paying back debt are now also huge priorities and therefore are a major part of the equation. But what’s the point of saving money and getting out of debt? To be able to spend your time and resources on things that are important to you. And so I’m glad to have had this little pocket of an experience outside the regular laws of the personal finance space-time continuum, because in looking back on it I’ve learned a lot about what’s not important to me, and what is.
What would you do if you knew that you had to spend all the money you earned in the next ten months, or lose it? What would you choose?
*Why did I move to China? Well, one day I was chatting with a customer at the bookstore where I worked and he told me about a memoir he’d recently read by an American who’d served in the Peace Corps in China. He said it was the best book he’d read in a long time. So I read it, and LOVED it, and decided that I too was going to go and live in China. Yep, that’s about the amount of thought that went into it! (The book is River Town by Peter Hessler, and I highly recommend it. That’s an Amazon affiliate link, but if I were you I’d save some money and just go borrow it from the library).