The mantra in personal finance is always “save, save, save.” Only debt and needs are allowed to be spent. But, is spending all that bad? You must live a little (YOLO and all that). As long as you don’t follow Lady Gaga’s lead and spend $50,000 on a ghost detector, the world won’t come crumbling down if you buy that book or treat yourself to supper.
Why Investing Isn’t Always a Bad Idea
According to experts, the route to riches is to be generous with your savings while being prudent with your spending. That is an excellent rule to follow in general. Some people take things to its logical conclusion. Dave Ramsey recommends paying cash for a home (no mortgage) if possible, but who can? Most likely not first-time purchasers.
Saving is good, and you should stick to a budget, but what if your aim isn’t to buy a house or a car? Maybe you’re content to rent for the rest of your life (which is fine), and you live in a city where you can walk or take public transportation anywhere you need to go.
Personal and financial goals should guide your purchasing patterns. You may have to pay money to achieve such objectives:
- Purchasing a home will provide a return on investment (10.6% on average).
- Traveling will enrich your life and bring you personal fulfilment (a priceless benefit).
- Hobbies promote human development and might even provide supplemental money.
- Education can lead to more work prospects and personal growth.
All that matters is that you’re still on pace to meet your objectives.
Determine How Much You Want to Invest in Yourself
This brings us back to your objectives. What kind of investment do you want to make in yourself? Perhaps your ambition is to travel the world. Perhaps you’re learning to play an instrument or paint.
All three of these instances demand you to spend money, but in exchange you receive personal enrichment, progress, and enjoyment.
Decide how you want to invest in yourself first, and then work out how to incorporate that expenditure into your budget.
Make a budget and a spending plan.
It is perfectly acceptable to spend money on something you truly desire. The key is to have a spending strategy and a budget in place.
The budget is the most significant aspect because it will tell you exactly how much money you have to spend.
A spending plan is primarily about determining your values and establishing some spending guidelines. For example, before purchasing something, you may have the following rules:
- Wait at least 24 hours before making a transaction. This will assist you in avoiding impulse purchases.
- “How would this purchase improve my life?” you should ask yourself.
- Can I find this item for a lower price? Can I get it secondhand or borrow it from a friend?
Many of us make impulse purchases. We can see it. We need it now. Being more analytical about your spending, on the other hand, can help you spend money guilt-free and enjoy life a little more.
What’s the bottom line? Spending is not always a negative thing. Spending money on things you genuinely want can, in fact, make you happy.