How to Understand “Irrational” Spending Decisions

This post is adapted from YNAB’s twice-monthly newsletter, Loose Change. 

Buying stuff is easy, understanding why we do it is not. Certain purchases can seem non sequitur: the loner who never invites anyone to his house but builds a bar for entertaining. The person who struggles to make ends meet but can’t imagine living without their high-end new car.

Some personal-finance experts make a living ripping people to shreds for decisions like this (more on that here). They act as if spending money is simply an exercise in rationality. It’s not.

We spend to express who we are and who we want to be. And sometimes, if people don’t believe they can get where they want to be by staying on course (planning, saving, etc.), they try to leapfrog the process and spend money in a way that seems crazy or irresponsible from the outside.

I once worked at a fancy Cuban restaurant with a busboy named Jason who came back from his shift break and announced that he had just bought a $3,000 art print. Like me, Jason was in his 20s and living at home. I was funneling cash for my move to Brooklyn, but Jason didn’t have a plan (at least one that he would share with me).

Every night, we waited on people with way more money than us: students at Yale who could afford $150 dinners, adults who had remunerative careers (unlike working at a restaurant and saying you’re a writer). Often, they’d drop the credit card on the table when I approached with the bill, not even deigning to look at the price.

What scared me more than getting yelled at by the kitchen staff or spilling a mojito was that I might not ever end up as one of the people sitting at these tables, looking relaxed and comfortable. I was scared I might end up like Robert, an older bullying waiter who started working in restaurants as a young actor. (Robert greeted me every afternoon from his hangover in a darkened corner of the restaurant, shouting “Chad!” I had a passing resemblance to NFL quarterback, Chad Pennington.)

Jason’s big art purchase never made sense to me until years later, when I was dealing with a health crisis and feeling hopelessly distant from the life I wanted. I’d always focused on the seeming randomness and price tag of what Jason bought, but never tried to empathize with what he may have been looking for. 

Maybe he was thinking of the people we served when he walked by the art gallery that day and thought, why not me?

Maybe when the salesperson put the bill on the counter, Jason just dropped his credit card without even looking. He felt he needed this purchase, not because he needed art. (They sold art posters at the museum down the street.) He needed the certainty that this phase we were in—folding napkins in a basement restaurant, clearing expensive food that people didn’t eat—was just a phase.

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