Whenever someone stumbles onto my website, or finds one of my videos, many of them assume that I’ll be standing on a soapbox screaming, “Stop spending your money!”
The truth is, I think spending money is important. In fact, I love spending money! My wife is usually the voice of reason in our relationship when it comes to buying things. She tends to see the bigger picture while I fight the urge to impulse spend.
The distinction we often miss between budgeting and spending money is that it needs to be balanced. Once you’ve taken care of your bills, it’s okay to budget some spending money.
Actually, it’s more than okay. It’s necessary.
Spending Prevents Burn-Out
As I’ve spoken with people about their goal of becoming debt-free, many of them are hesitant to begin because they think I’m going to force them to cut all of the fun out of their budget.
Usually the opposite is true.
If you plan for it, and you have the money in your budget, then I encourage you to have some fun! Set aside a little bit to go out to eat or go to a movie. Just be purposeful about it.
The deeper we sacrifice, the sooner we will reach our financial goals. However, you need to find your balance. I’ve seen many people get burned-out and stumble because they cut too deep in their budget. They didn’t allot enough money to enjoy and gave up before they reached the finish line.
You Work Hard
We spend the vast majority of our waking hours at work. Why do we work? It’s a necessity in order to pay the bills and put food on the table. But shouldn't we use some of that money for ourselves? If we’re spending so much time away from the things that matter most, we should be able to use some of the earnings to do exactly that.
Now, don’t misunderstand what I’m saying here. It’s okay to say, “I work hard and I’ve earned this” in moderation and when you have the cash in your budget. However, this is not an excuse to take out a loan or put something on a credit card because you've earned it. That is simply irresponsible.
Look for areas in your budget where you can add in some extra fun. If you got a big bonus at work, take a small portion of it and take the family out. These things help remind us why we work so hard.
Personal Finance is Personal
While there is a ton of advice out there on personal finance, it’s important to remember that your personal finance is exactly that; it’s personal.
Everyone is different. We all have a different story that brought us to our current financial situation. While the advice I offer pertains to most situations, remember that you need to do what works best for you and your family.
Some people have a higher threshold when it comes to sacrificing financially. I’ve seen people completely cut all the fun out of their budget in order to reach their goal sooner. But, as I stated earlier, I’ve also seen people get overwhelmed and quit when they sacrificed too deeply.
This is why I think working with a financial coach can be valuable. Creating a plan for your specific situation ensures that you get exactly where you want to be.
Save to Spend
You’ve had your eye on a big item. Maybe it’s a new computer, or that new iPhone. Your heart says, “Buy it,” but your wallet doesn’t seem to get the message.
Sometimes we have to save in order to spend. This is where the real self-control comes in. If you don’t have the money for a Roomba, then you can’t have it; yet.
I want to encourage you to buy the things you really want. Just don’t use a credit card or loan to get it. You can have the iPhone, computer, or robot vacuum cleaner someday, it just may not be today.
Create sinking funds to save up for the bigger items you want. This means putting a little aside each month into an envelope until you have enough cash to go buy the item. That way you can have the things you want without throwing money away on interest.
Yes, spending is extremely important. As long as you have a written budget in place, you can enjoy your money without neglecting your other financial obligations.
Know some tight-wads? Share this with them!