See if this story sounds familiar. You're walking through a store and you overhear a child ask his mother if they can buy something. He grabs it, shows it to her - smile from ear to ear. Then mom replies, "No, son. We can't afford it."
Here's another story. I can't afford a 3,000 square-foot house on a lake here in the southwest suburbs of Minnesota. Well, I mean I can, but I can't. I have the money for it but if I buy it I'm broke and my long term financial plan is ruined. So can I really afford it?
What Does "Afford" Mean?
Afford is one of those words that seems to have a different meaning depending on the situation. Unfortunately it's the speaker who knows what definition was in mind when choosing to use the word. The listener really can't know.
In some cases, afford literally means not having the cash. Sometimes it means that an item is not in your budget, meaning by buying it you would be over budget in that particular category. It could mean by buying it now you are sacrificing your long term finances. A lot of the times it means that you don't want it but you don't want to say the real reason and it gets the kids off your back.
"We Don't Have the Money"
If you can't afford rent or you can't afford to eat, you don't have money available to pay for those things. This is the version most people think of when they hear, "I can't afford it." It's the version I grew up using and understanding.
This gets confusing when you do have the money and say you can't afford something, like me with that fancy house. By saying you can't afford something while having money available, you probably mean something else - perhaps it's not in your budget.
"It's Not In Our Budget"
Maybe when you say you can't afford something it means that it's not in the budget. In this case you have other money available, but your budget - the allocation of your income to various categories - doesn't allow for too much money in any given category. So, "I can't afford to go see that concert with you next weekend" could mean that you've already spent your allotment of entertainment dollars already or have other events planned that take precedence over this one.
Since I'm not aware of many people who budget in this way (I actually don't think people need to), this isn't likely to be the version most people talk about.
"It Doesn't Fit Into Our Long-Term Plan"
If you tell me that you can't afford something and you mean that withdrawing money from your savings today would jeopardize your financial future, I would ask who you are using as your financial coach. This version takes some thinking, and a projection - either an actual projection or a hypothetical one - about how big your nest egg is, how big it needs to be, how much you put in, and how much you take out. It's pretty sophisticated, but very true. If I bought a big house on Lake Minnetonka I would drain my savings and have to start over. I would destroy any chance of financial independence*.
Since most people don't have a long term financial plan, most people aren't using this version of "afford" when they talk.
"It's A Waste Of Money And I Don't Want To Tell You The Real Reason"
Most people who say they can't afford something really mean that they don't want to tell you the reason. That mother who told her child they can't afford the item he showed her doesn't mean they don't have the money, it doesn't fit into their budget, or that their long term financial plan would take a hit. She means that she knows the kid will use it for a couple days and it will be wasted after that. Or she means that it's dangerous for the child to have. Or she means that she doesn't want to spoil her child. The point is that she doesn't want to say the real reason. "We can't afford it" is an easy out.
Remember, most people understand "afford" to mean the first version - that there is no money available. By telling people you can't afford something, especially a parent to a child, you run the risk of the child thinking you are poor when you probably aren't. You run the risk of the child thinking you have to cut back because there is no money.
There Is A Better Way
A simple answer is to become very clear about what is important to you and your family. By doing so you give yourself permission to spend money, time, and energy on things that are important to you, and it has the side benefit of not wasting your money, time, and energy on things that don't matter to you.
Author Carl Richards says it best in his book "The Behavior Gap," by saying "We can't afford that is not the same thing asWe'd rather use our money for something more important. The second statement shifts the debate from Are we poor, or what? to What matters most to our family?"
* I'm, of course ignoring the fact that a house is an appreciating asset - I'm using the logic that would apply to any purchase that would require a withdrawal.