Spending money is defined as any money you use to purchase an item or service. But when can spending money be a problem? Spending money can feel good if we’ve chosen to do so but can feel like a chore when it’s spent on obligations.
You can choose to allocate money for a specific purpose. Other times, money can be squandered away. I’ve been guilty of having an extra $20 and by the end of the week having no idea how I spent it. I didn’t track where my money went and had not set out true intentional spending.
At times in the debt-free and financial independence communities, spending can feel restrictive or have a negative connotation but here is why I think spending money is a good thing.
There’s a difference between spending your money thoughtfully and with intention vs. mindlessly blowing your next paycheck.
Using money with intention and spending money mindfully is incredibly powerful. Here is when spending money is a good thing:
I’ve written about how I began to feel guilty about being a high-income earner. One of the things I felt shame about was not being very mindful of how I used my income. I’d pay my bills on time but didn’t have a clear direction as to what I wanted to do with my money.
As my salary increased, I’d spend more money on clothes, shoes, handbags, and restaurants, while keeping my savings the same. It seems simple enough, but it never occurred to me that I didn’t have to spend all of my money and in fact, I could save it. I didn’t upgrade my car or get a fancy apartment, but I’d spend mindlessly. There was no rhyme or reason why I continued to buy things other than I had the money for it.
Take Control of Your Financial Future
Once I learned there was a movement of young folks who were leveraging their incomes and creating a path for early retirement, I realized that there was a reason to save. I didn’t have to stay at a job that was stressing me out, for the next 30 years just to secure a pension for retirement.
There was power in taking control of my own future and orchestrating my own retirement. I could develop my own plan for retirement. Early retirement. My plan and my rules.
I felt empowered and embolden knowing that it was in my control. I chose to create a plan to be work-optional in a decade. However, to do that I had to choose how and what I spent my money on.
Living a life of extreme frugality didn’t appeal to me at all. But once I internalized the true cost of buying another pair of boots for $100 or invest $100 the choice was easy.
The complicated decisions came when thinking about the things that made my life easier. There were a few conveniences that I decided to keep and pay for. I chose to have a housekeeper come twice a month and instead of buying a lawnmower, I paid for a monthly lawn mowing service.
I was traveling 10 to 15 days out of the month and I didn’t want to spend the few days I’d be home cleaning my 2,300 sq ft home.
Sure, I could have contributed more to my 401k or sent the extra cash to my brokerage accounts but once I knew that I had a plan to become work-optional in a decade that was satisfying enough.
Having a plan gave me the freedom to do whatever I wanted with any extra money that came in. Oddly, there were very few things that I wanted more than financial independence.
When I receive an email from my favorite stores about a sale, I ask myself if it was worth working an extra day or retiring on schedule. Sometimes it was but most of the time it wasn’t.
I realized that over the years I developed a love for shopping for the sake of shopping. I wasn’t buying things that I truly needed or even wanted. When I learned the power of compound interest and investing, I began to desire something I hadn’t thought of before, building wealth.
There’s a distinction between using money that you have and borrowing against your future. Sure, it would totally make my life easier if I ordered takeout food every day. Understanding the true cost of the thing is important. If the goal of eating is simply to give my body the energy and the nutrients it needs to be satisfied and to run effectively is ordering takeout food the most cost-effective way to do that? Is it the only way to get the job done?
I began to think about creative ways to spend time with friends. The easy option was to meet for dinner or brunch. But if the goal was to spend quality time together couldn’t we do that at a potluck or with a packed lunch and a hike? What about a walk around the park or a picnic?
Traveling was one area that I wasn’t willing to eliminate. I enjoyed exploring a new country every year. Whether I was traveling with friends down to Mexico or taking a solo trip to Greece, I didn’t want to eliminate travel for the sake of retiring early. After all, I wanted to enjoy my life today as well as in the future.
I discovered the magic of hotel reward points and airline miles. I used credit card churning techniques to fund my travels.
As a solo traveler, I’d stay hostels for most nights and used hotel or credit card points on the final day or two. Staying at hostels was a great way for me to meet travel friends along the way and save money.
My husband and I honeymooned in the Maldives and Hong Kong mostly on points and miles. We’ve vacationed at five-star hotels in Spain and stayed in castles in Ireland all while saving close to 50% of our incomes. We balance our vacations to include frugal wins as well as splurges.
Spending money, when done thoughtfully, can feel incredible. It doesn’t have to be a bad thing. Having a financial plan allows you to set your goals and then do what want with the rest.
Whether you save all year for a vacation or plan for your first home purchase, using money as a tool to live your best life is the goal. I am an advocate for allocating guilt-free fun money every month. Use that money anyway you want!
Whether you use that money to buy a new shirt or splurge on a meal, when you plan for it takes the pressure and guilt away knowing you are not taking away from your financial goals.
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Maria @ Handful of Thoughts | 14th Oct 20
It’s all about having a plan and being mindful with your money. Whether you are saving or investing the key is to be aware of what you’re doing and asking if it helps you reach your goals.
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