10 Things You Need To Know Before You Spend Money
Spending money. Art or Science? Logical or emotional? There’s much more to spending than just bringing out money. To spend money means you decided to spend. According to research, most adults make thousands of decisions daily. It’s obvious that a good number of them will have to do with what to spend money on.
Spending money is thus an activity that no one is exempted from. Right from our tender years to old age we will continue spending. Spending is essential and vital to our existence as humans. We are destined to exchange our financial resources for products and services regularly.
I’m convinced that most of us consistently spend money only from the surface, without any rational thought to the process. This shouldn’t be the case. A more detailed insight on spending is important, especially since most of us have limited financial resources.
So without much ado let’s dive in. Here are 10 things you need to know about spending money:
Spending money is a decision
When it comes to spending, decisions need to be made. For instance, what to spend on requires evaluating certain alternatives before arriving at the most satisfactory outcome.
The evaluation of alternatives requires taking steps and going through some sort of process before a decision is reached. The higher the quality of the process the better the decision on what to spend on. This is why the era of spending without thinking will lead one to poverty and penury. Desist from spending without thinking.
Postponing spending decisions won’t harm you
Let’s say for instance you just received a windfall. Money you didn’t even expect. Chances are that before you know it, you have shelled out the money on some mundane item. And this item is just something you thought you needed to have.
The truth is that you rationalized the need for that item before taking the plunge. But if you had spent more time weighing your options, you would know that you’ll not be affected in any way if you postpone purchase. Anything you postpone getting now can always be gotten later. And later is when you can better afford it. You are not what you possess.
Money is meant to be multiplied not spent
Many of us continue to get this wrong. We think of what to spend on when we have money in hand. Whereas the right approach is to immediately think of how to multiply your money into more.
Every currency note in your wallet or bank account is a seed that can be used to produce a harvest of more seeds. While some are allowed to be deployed for your upkeep, a good chunk of what you have should be put to work to make more. Now that’s what it’s meant for.
Spending less than you earn will help you build wealth
The forces that drive wealth are attracted to those who spend less than they earn. There’s a consensus that those who spend less than they earn can handle money better. And better custodians end up building wealth more than poor custodians of money.
It takes money to make more money. Spending all that you earn means there’s nothing left to make more. And that leads to poverty and lack. It pays to remember and keep this in mind whenever you get some money. Find a way to keep something aside in order to fuel and fund your wealth building efforts.
Spending money is hardly therapeutic
Spending money is not the solution when you’re facing the storms and challenges of life. Some people spend resources getting drunk or going on shopping sprees in order to make themselves feel better. You will feel better when you learn from your mistakes and determine not to indulge in the thing that caused you stress in the first place.
You might be feeling good afterwards. After all, “life is too short,” as many people rationalize. You’ll only end up buying things that are of no help in your quest to build wealth and financial success.
You can embark on no-spend days and weeks
Let me assure you that nothing will happen to you if you don’t spend money. The sun will still rise in the East and set in the West. A few years ago a lady set out on a 365 day challenge not to spend money. And each day she set out to post her activities on Instagram.
You too can challenge yourself. Decide not to spend money for some time. You can keep the debit and credit cards away and make all necessary purchases before hand so you refrain from spending. Embarking on a no spend challenge will develop your consciousness not to always think about spending money.
Shifrah Combits has written an article titled “33 productive things you can do instead of spending money.” Definitely an insightful read for a list of things you could do instead.
Curb Emotional Spending
An assessment of many of our spending decisions bring out the fact that we made choices based on our emotions. And our emotions aren’t usually the best yardstick when it comes to money matters.
Mankind is without a doubt emotional. But he has been given the power and ability to make rational and logical decisions. Mankind would never progress if all we could do was to function under the realm of emotions. When it comes to the intelligent use of financial resources, it pays to keep your emotions out of it. Resolve to make every spending decision the result of a rational and logical intellectual activity.
Avoid spending money you don’t have
Do all that you possibly can to avoid credit. Especially credit cards. With credit comes interest payments. You end up paying over a longer period. But you also end up paying substantially higher when you use debt to fund your lifestyle.
You’re best advised to wait and plan towards what you want. Instead of using credit or getting loans so you can afford it. Loans and credit are permitted, however. But this is only when the facility is used for investment purposes. And you can only invest to fund projects that you’re sure are extremely profitable with returns. For anything other than that, don’t use credit.
Little drops of water make a mighty ocean
The fact that you are where you are financially is dependent on each and every spending decision you make. While you’re mostly focused on justifying your spending decisions on a daily basis, you might be shocked to see the extent of your spending over a longer time frame.
Each and every spending decision does make an impact on the bottom line. A dollar spent is a dollar that can’t be saved. And a dollar that can’t be saved is a dollar that can’t be invested.
Stop spending to impress other people
Is the reason why you spend what you spend to impress others? Are you trying to make a statement and to win people’s approval by throwing money around? It’s strictly a no-no.
Trying to buy approval, relationships or social class through spending money to impress others will only bring you more harm than good. This is because the people you’re trying to impress do not care about you beyond what you’re buying for them. Once you stop patronizing them, they’ll drop you so fast you wouldn’t realize when it happens. Impressing other people with your money is a total waste, pure and simple.
Let me conclude by reiterating that the higher the quality of your spending decisions the better your chances of becoming financially successful. The more you understand how you spend and the best way to spend the better your chances in building wealth.
All wealthy people share similar traits. They’re usually more likely to take the issue of spending more seriously and rationally. And that’s a place where we all must be if we’re desirous of becoming wealthy!
Note: This article originally appeared at MoneyTalkNG.
Category: Personal Finance
