Dining Out While in Debt: Financial Experts Weigh In

In the world of internet finance, people love to come up with rules: “Put 20 percent of every paycheck into savings.” “Spend no more than 30 percent of your paycheck on rent.” These are usually sound bite-able ideas that are easy to remember. They’re general enough that they can apply to most people, yet specific enough that they sound like someone sat down at a desk with a pencil and slide rule to formulate that exact percentage — meaning it has to be true. Right?

In our TikTok-driven world, where nuance can be sparse, more and more people are sharing these “rules,” which are becoming increasingly more extreme and prescriptive. A prime example is the subject of a recent Thread that stated: “If you can’t cover a $1,000 emergency without going into debt, don’t even think about going out to eat until you can.”

The advice tends to get thrown around in the personal finance space a lot. For instance, controversial finance guru Dave Ramsey has said on his podcast, “Restaurant food is entertainment, it is not nutrition. If you want to do entertainment, you do it when you’re not broke.” Such sentiments are reminiscent of the dreaded millennial avocado toast discourse of yore, or the notion that you can get rich quick by giving up your morning Starbucks.

But is this financial “rule” about eating out worth following? It depends on who you ask. And we did: we talked to five experts for their thoughts on this advice, what to take from it, and what to throw out with the avocado toast jokes.

Experts Featured in This Article

Aja Evans, LMHC, is a financial therapist, coach, and speaker based in New York.

Lindsay Bryan-Podvin, LMSW, is a financial therapist and a behavioral finance expert and consultant for Bread Financial.

Chris Robinson, PhD, CFP, is a professor emeritus of finance and senior scholar at York University.

Rachel Cruze is a personal finance expert, radio host, and author of “Know Yourself, Know Your Money.”

Courtney Alev is a consumer financial advocate at Credit Karma.

So, should I go out to eat if I don’t have $1,000 in an emergency fund?

While most experts agree with some of the general tenets this advice is based on, like the need for an emergency fund, almost everyone we talked to thinks it draws too firm a line.

For starters, it’s just not realistic, says financial therapist Aja Evans, LMHC. “When we’re too rigid and strict with our budgets, it really can backfire, because people can end up feeling deprived,” Evans says.

This deprivation can be doubly troubling when applied to conversations about food, which people need to survive but which can be fraught for many people due to diet culture. If you have a complicated relationship with food, this rule isn’t just bad advice, but can have negative mental health consequences, Evans adds.

It also “paints this picture showing that you can’t enjoy aspects of life that involve spending money unless you’re in great financial shape, and I just don’t think that’s fair,” Evans says. “Plus, if you have shamed yourself into believing that you don’t get to treat yourself ever, that you don’t get to enjoy your money, then when you are in a position where you do have money to spend, it can be really difficult, bringing up guilt.”

Financial therapist Lindsay Bryan-Podvin, LMSW, warns that if you come across rules like these that are especially strict, think twice. “Every time I see a thread like this preaching a hard-and-fast rule, I almost always have a red flag — or at least an orange flag — go up,” she says.

As she sees it, personal finance is, well, personal. A rule like this can’t possibly be nuanced enough to apply to all financial situations. “Yes, there are good guidelines and rules of thumb that can help frame what we might want to be doing with our money, but to use just a blanket statement saying, everyone should do this before they do that? It’s incredibly shame-based and harmful,” Bryan-Podvin notes. “And I just don’t think it’s true that you need to have $1,000 in savings to go out to eat.”

Bryan-Podvin adds that not going out to eat may end up distancing you from friends and family. That’s not to say that you can’t find other, cheaper ways to spend time with the people you love, but never going out to eat with them is often unrealistic, especially since eating is such a big part of so many of our cultures.

“It’s just really just black-and-white thinking,” Bryan-Podvin says, noting that this kind of thinking can make people feel stuck. It’s better to take a flexible approach when budgeting for different kinds of meals, especially when it comes to small purchases, she adds.

Dining out is also typically a small purchase, which matters, according to Chris Robinson, PhD, a professor emeritus of finance at York University. He cites a 2011 article in The Journal of Consumer Psychology which found that spending on small things will give you more happiness than when you splurge on big-ticket items. So, while it’s easy for an advisor to take issue with a recent ironic trip to Margaritaville or your daily latte, it’s typically more productive to tackle bigger expenses.

“Obviously, saving your money is good,” Dr. Robinson says, “but going out to dinner is a small thing, not a big thing, and it’s going to bring you more happiness than buying a big TV set will.”

Happiness is a worthy measure, Dr. Robinson adds, because when your mental health is in a good place, you’re actually more likely to make better financial decisions. Studies have shown that folks who struggle with their mental health are more likely to have less self-control when it comes to financial decisions, per University of Wyoming researchers.

“The challenge is a tradeoff between long-run financial survival and dealing with the immediate depression,” Dr. Robinson adds. “Spending to get out of depression doesn’t work. But if the spending is linked to something else, like eating with friends or paying a gym fee to exercise, which [may help] depression, then maybe you have to sacrifice some of the long-run saving plan.”

As Dr. Robinson notes, spending time with loved ones is a key reason we eat out. But, if you’re hoping to spend a little less money while getting the same level of connection, Bryan-Podvin recommends finding ways to spend time with your friends and family that don’t involve sit-down dinners: host a potluck picnic in the park, watch a movie or “The Bachelorette” together and nibble on popcorn, Take a walk side by side. If your friends don’t seem into your suggestions, consider loud budgeting and being upfront about wanting to save.

While it was easy for these experts to poke holes in this severe advice about going out to eat. Personal finance expert Rachel Cruze, who happens to be Dave Ramsey’s daughter, says she generally agrees with the warning from the Thread. “Going out to eat is an example in a picture of things that are not necessities,” she says. “If you’re in a financial position where you don’t have savings — especially if you are in debt — you don’t have a strong financial foundation under you . . . I would say you cut all non-essentials.”

Cruze says cutting back on dining out is one of her top recommended starting points for folks trying to save money, since, with some exceptions, sit-down restaurants tend to be more expensive than a meal at home. “We find that people who are willing to sacrifice their lifestyle in a really deep way when they’re in that position, they find progress so much faster,” she says.

While being super strict might work for some people, as Evans points out, incremental change is often the best approach for long-term change. So instead of telling yourself you can’t dine out until your emergency fund is flush, she suggests trying to stay within a limited amount or time frame, like once a week.

“I think it’s extremely important that when people are trying to meet their short and long-term goals, they add joy in there,” Evans adds. “Sometimes that joy is coming from eating out with friends or getting takeout after a long day.”

In the end, it’s about balance, says consumer financial advocate Courtney Alev. “You’ll have to say no to some things, but not everything,” she says, adding that it’s not a bad idea to plan ahead and factor meals out into your monthly budget if you have one. “The key is to avoid spending money you don’t have, and if you can put aside money for things like entertainment and dining out, there’s no reason why you can’t enjoy those experiences periodically.”

Do I need an emergency fund?

Yes, an emergency fund is a good idea; it can help if you get laid off, have an unexpected medical emergency, or for when you suddenly realize you spent all your rent money on Taylor Swift tickets.

Bryan-Podvin and Dr. Robinson agree, however, that many recommended emergency fund ranges are unattainable. Some advice states you should have three to six months of expenses saved, while others suggest six to eight months.

Those estimations are outdated, Bryan-Podvin suggests. A few decades ago, for example, “It took about eight months on average for a person to get a new job, which is why they started telling everyone to have an eight-month emergency fund,” she says, adding that a 2019 paper in the Social Science Research Network suggests it’s more realistic to have a flexible goal of one month of expenses.

Bryan-Podvin says that because these big savings goals have become idealized, the fear of never being able to reach them can deter people from saving at all. “So many people feel they’ll never be able to hit the eight-month target, and end up saying, what’s the point?” she says. “I like having $1,000 as a benchmark since it’s more attainable, but it’s not true that you’re not allowed to enjoy your life until you have built up that emergency fund.”

How can I feel less guilty about spending money?

As Evans and Bryan-Podvin pointed out, a lot of these “rules” just breed shame. To help decouple from that stigma, Bryan-Podvin suggests first recognizing it.

If you’re stressing about a friend’s upcoming birthday dinner, notice and examine that. As you do, try to “differentiate between guilt and shame,” she suggests. “Guilt is external. It’s saying, ‘I did something bad and made a mistake.’ Shame is internal. It’s saying, ‘I’m bad.’ When we see these types of money rules, they prey on the shame element.”