Guys, I’m all for making money, saving money, investing money, growing money, and spending money etc, etc. Who isn’t?
Money is required for life, for survival, for fun, for peace of mind.
However, is it an end-all and the most important thing? Nope.
Some of the richest people have the saddest lives. Some of the highest earners have the worst spending habits; while it may seem that they have financial security, in reality, they are just accumulating credit card debt and literally have no savings for a rainy day. Others do work hard to save money and pay attention to their household budgets, yet still are dissatisfied. That is because when it comes to how you handle your pocket money and spending on personal things, what you are spending money on, matters.
Why is it that some people are so well off, yet so unhappy?
To start, being well off and making a lot of money does not equal happiness. So while many of us out there are pursuing higher pay or multiple streams of income, there comes a point where more does not equal better. Studies have shown that for emotional well being, earning beyond $75,000 per year does not make much of a difference. It’s important we recognize this and acknowledge it so that we don’t get so carried away in making money that we lose our passion for life, and/or lose perspective on what really matters.
In the same way, while earnings don’t equal happiness, spending money does not correlate with happiness either. Rather, it’s what we’re spending money on, and how we manage it that contributes to satisfaction.
For instance, are our purchases adding value? Are we affording the things we need AND able to have something left over for fun? Do our personal expenses each month stress us out because we aren’t sure if we’ll be able to pay them? Just because you earn more doesn’t mean you have to spend more, right? We should not be pursuing some societal standard of how we live our lives, which includes how we spend and how we show ourselves off to the world. Personally, I think much of this stems from the trend in our society to keep up with the Jones’ and everything we see on social media that tells us that, in order to be happy, we need to start spending money on certain things or look a certain way.
This article assumes that you are saving and investing as you should be, and addresses ways we can keep our personal spending triggers in check and make sure that when we do spend, we are spending wisely and in a way that brings us true joy.
7 Ways to Check if You’re Spending Money Wisely
We need to break out of this cycle of spending money we don’t need to be spending and looking for happiness in material goods; instead, we should be critiquing our spending and making sure that when we part with it, we receive as much benefit in the exchange. In addition, how we are spending money, and on what, should be only determined by what we value and our financial goals for ourselves…not what anyone else tells us to value or do.
On top of all of that, there are definite steps you can take to ensure you don’t overspend if you don’t need to.
What am I talking about?
Here are some things to ask and look for.
1- Is what I’m spending money on actually going to make me happy?
Instead of looking around and seeing what other people are doing, I think we need to take a step back and figure out what makes us, as individuals, happy. For instance, I have friends that are obsessed with handbags and fancy cars. They could care less about going to another country or traveling.
In contrast, I’m a bookworm, I love the beach and I love to travel. So my spending habits lean towards buying a good book, and a ticket to somewhere. For me, that’s the epitome of happiness. I don’t have a fancy car. I don’t use fancy handbags (I think my most expensive one was less than 200 dollars on sale and for me, that was a splurge). I’m perfectly happy not having those things in my life. As a result of our differences and preferences, my friends and I go about spending money very differently.
How do I sustain this difference?
2 –Don’t compare what you have to what anyone else has
Not comparing is really hard. But if you can get to that point, a point to where you don’t give a rats ass what anyone else is doing, your happiness meter skyrockets.
In addition, we must recognize that we each are traveling on our own paths. My beginning does not compare to your middle. Another perspective is that while two people may have the same goals, their methods and the experiences that drive them are unique; thus, the timing and level of success that each achieves will be very different. In other words, we are each our own, with our own strengths and weaknesses, and those are incomparable to others.
You can be inspired by what others are doing, or what others have and want those things for yourself, however, when and how you get them or achieve it? It will be completely different. In fact, it SHOULD be. When it comes to life, you should be living it your way, on your own terms.
The same goes for how you go about spending money and what you define as being important to you.
3 – Experiences matter over material things.
Where is the bulk of your spending going? Are you more focused on material goods or on purchasing experiences?
There are plenty of articles and studies out there that dictate you should be spending money on experiences versus physical items. I’m definitely a huge believer in that philosophy. Traveling is probably the ultimate experience, but not the only one we should be considering. Life has a lot to offer: concerts, classes, activities, and tours to name a few.
It doesn’t matter what or where your experiences are. You don’t need a fancy Instagram-crazy trip to Greece. You just need to be spending money and time in ways that allow you to try new things and step out of your comfort zone. The whole idea with prioritizing experiences is that it can contribute to personal growth, teach you valuable life lessons, and give your perspective.
4 – When it comes to material items, choose quality over quantity
Generally, I feel that less is more. Owning less stuff is better than more. Your home will be less crowded, and you’re less likely to have things in your home that you don’t use (aka items that basically have thrown your money away). Some people have a rule to throw something out every time they buy something new.
As such, I think it’s important to keep in mind certain things:
- Some high-quality items may cost more upfront but may also last much longer, saving you in the long run and elevating your lifestyle (if that’s important to you). I have a tendency to put this to practice with key clothing items that I know will get a lot of wear. Also, furniture.
- Figure out which luxury items for you are a must and are not just you keeping up with the Jones’s. You’ll get a better idea of where your money will give you happiness and satisfaction, and you’ll spend less time running after things for the sake of showing off to other people.
Above all, you should never pay full price for anything; nothing is ever worth its retail value. If you need help figuring that out, check out my post here.
5- Shop with intention and stick to a budget
I personally try not to buy anything new unless I feel I really need it. For instance, if I need to replace broken shoes or worn-out clothes; kitchen items that don’t work anymore; or decoration pieces that may be missing parts etc. Don’t get me wrong, I’m not a minimalist; my need for shopping and new clothes can sometimes trump sense, but when I do shop, I try to be very intentional and I stick to my budget.
My goal is to make sure that when I’m spending money, it’s in the best possible way, the best deal and the best quality.
In addition, it’s not enough to afford something or just want something. You should have a reason, a passion, a love for what you are getting. It should enhance or HELP your life in some way, otherwise, your purchases will just become a burden. E.g that fancy car that you feel so-so about–not worth the money pit to impress your colleagues and neighbors.
So, let’s stop spending unnecessarily on things that don’t help us or retain value; let’s first budget for what we really need and be intentional with what we really want.
6 – Don’t overpay for life’s essentials
I’ve had conversations with people about their regular spending, and it’s amazing what people don’t know or haven’t thought about in regards to where their money goes. Something simple, like groceries, can cost you so much money if you don’t look around. For instance, there are two budget grocery chains in my city. TWO. When I use them, I pay about 40% less than if I go to a regular grocery store.
I have friends who drive an extra few miles to fill up their tanks at Costco because it’s that much cheaper there. I haven’t done this yet, but I can imagine the cost savings if you have the time and energy to make something like that work.
Life essentials like gas and groceries are just two examples of where we may not pay attention to where we are spending money because they are just that: essential. You need them anyway. However, taking note and shopping around can make a big difference.
This is probably the hardest category, though, to alter, simply because life responsibilities get in the way of putting this into action. I wanted to just mention it as food for thought; every single item you purchase doesn’t to be scrutinized, however, if you DO have the time and notice differences in the marketplace, this may be worth paying attention to.
7 – Make big life purchases when you’re truly ready…and make them your own
This post isn’t meant to deter you from purchasing things you need, want or can afford. It’s meant to make you think twice about WHY you’re spending money and where.
I spent last summer buying a house; some may say I shouldn’t have (I’m single and really not sure about where I’ll settle forever), but I can afford it comfortably, I have paid off student loans, I’ve always wanted to own real estate and I believe my purchase is a good investment.
I made this decision purely for me; I wasn’t trying to keep up with anyone else and it’s not a burden on my finances. Likewise, make these big decisions for yourself, because you will be the one that has to live with the result (or the consequences).
How can you get started?
So I’ve discussed what you should keep in mind and consider when you’re shopping and handling expenses, but how can you get started on cutting back and spending money intentionally?
Take a good look at your credit card or debit card statements
Most online statements break down your spending for you. It will tell you where most of your expenses are occurring: travel, food, entertainment, gas, etc. You can take it further and print out statements from the past three months. If you tend to use your debit card more, print out your bank account statements and do this.
Highlight those life’s essentials all the same color and tally them up. Do the same with food and divide it up into groceries and eating out, and tally that up. Keep going with the different areas of life. When you’re done, you’ll have a better idea of where you have a spending problem and can come up with a plan to fix it.
Another thing to look for is items where you can potentially re-negotiate prices for. If you pay for cable/internet, I bet there’s a deal going on with your provider that you can take advantage of, OR you can ask around other companies and see how much you’ll be able to save!
Clean out your home and organize your spaces
This takes time, but it can help you really see how much you already own and can give you the motivation to stop spending on things you don’t need…because you probably already have it!
As an example, in your closet, hang up everything you own and arrange it by color. When you do this, you’ll see how many black shirts you have, which ones look a little rough and which ones you’ve forgotten about. When you arrange by color you’ll also see what’s missing and what you have too much of.
This not only will help you clean up and organize, but can help you when you do go shopping; you can now focus on the areas of your wardrobe that are missing. (Another idea with your clothes is to create capsule wardrobes for yourself)
Make clear cut budgets for the items you do need
Have a number in mind before you shop. If you have no idea what to expect in regards to cost, then do some research. Compare prices at different retailers. This is especially important for more expensive items.
If you go into it with a budget beforehand, you’re much more likely to stick to it.
Start saving for big-ticket items
If you are trying to avoid charging everything to your credit card and/or accumulating credit card debt, then don’t go shopping until you have the amount you need. Again, this is especially true for big ticket items.
All I would like to encourage you to do is to be intentional and make decisions that are best for you and what you want AND to look for the best deals and quality. You have hard-earned money. If you cut back on bad spending and focus on spending money for your personal expenses wisely, you will keep it longer, make it work for you longer, and also come to value and respect it more. Plus, when you spend in ways that bring you true happiness – because you’re being true to yourself – you maximize the value of what you purchase as well.
Plus, by paying attention to where it’s going, you will realize how much waste there is in our current lifestyles. If you reduce that waste, you’ll not only relieve yourself of a burden, but also come to appreciate the things that truly matter.
Just because you CAN afford it, doesn’t mean you should buy it. Just because someone else is doing it, doesn’t mean it will bring you happiness.~youbethree
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