Spending Money Isn’t A Bad Thing!

Learning how to spend your money gives you a competitive edge

As a personal finance counselor, I spend my days advising people on how “not to” spend money. Saving for your goals, save for your future, save for whatever else you need to prepare for. What I realized was maybe, instead of constantly focusing on saving money, we are needing a different type of lesson; learn how to spend money.
 

Spending money is really just a decision between now and later. Are you spending the money now or saving it to spend in the future? The answer to that question ultimately leads to, are you striving to be wealthy or rich? Do you know the difference? Let me explain, Warren Buffet is considered “wealthy” to most, yet, he drives an old car and has lived in the same, modest house for over 6 decades, yet most people define him as wealthy. You see, wealth is not flashy for most and it is long enduring. The choice between the two comes down to a personal decision, on whether you are burning through your current funds or are you slowing the burn rate by learning to spend money at a slower pace so it endures the long haul. Are you spending the funds today that you might need for bigger goals and to make decisions tomorrow?

Learning how to spend your money gives you a competitive edge. I apply the “predicting vs forecasting” scenario to knowing how to spend money. Can I predict what will happen in the future? I think for most of us, the answer is no. I’ve never been good at statistics which lends itself to guided prediction. This is why I revert to using forecasting so that I can determine what I need today and what I will need for my future. Learning how to forecast is a skill that builds confidence in decision making and actually makes decisions in spending money easier. I can forecast out the need for a new car, save accordingly and know when to spend the money on the purchase.

There are always instances where these skills will not play out 100% in your favor. For example, what if I am in an accident and my car is totaled? Well, hopefully, I made a conscious decision to make sure my insurance was adequate so that I receive some funds there and if I applied forecasting to my money spending, I most likely saved some money along the way in the chance I might need it for an emergency. I could not have predicted this outcome but I applied some forecasting and therefore put some money aside. This is where the Emergency Fund plays its part.

Learning how to spend money leads to being in control. If you are not in control of your spending, you are most likely living in chaos. You don’t know where your money is going each month because you haven’t learned how to spend your money so that you have self-control, like when the credit card bill comes and you are totally surprised by how much the balance is. Your finances across the board feel a little chaotic in that you haven’t assigned goals to your earnings and your spending is all over the place.

The good thing is, chaos is a great motivator for change. What better time to embark on a new challenge for yourself? Being prepared to start forecasting your future and putting effort toward learning how to spend is a great way to springboard on New Year’s goals. Spending money isn’t a bad thing, we all do it. Learning how to spend and how your goals and future plans work together, determines your burn rate and outlines how you want to live your life.  

Author Bio

Tonia Peasley, AFC®, CFP® candidate is a Financial Coach. She is a 22-year veteran military spouse and mom to a son serving in the military. Tonia has 20 moves in her chest of adventures and enjoys traveling the world. Connect Tonia Peasley