We’ve had a nice little break from Marvelous Money posts (maybe to let the first three sink in?), but they’re back in action! I thought before we talked about ways to track a budget, it would be good to address saving money’s other half: spending money.
Yep, we’re talking about spending money today! [Keep in mind that we're talking about spending money you've already budgeted for -- I'm assuming you've already taken care of everything else in your budget (retirement, savings, etc.), and this is money you're going to spend no matter what.] I firmly believe that how you spend your money is far more important than how much of it you have. Money can either be a powerful tool, or a source of endless frustration. I think the key to making money the former, and not the latter, is four-fold.
1. Figure out what you value. Sounds obvious, doesn’t it? We should spend money on things we value? We know this, but I think a lot of us don’t do it. The Starbucks example gets picked on a lot (you know, stop wasting money on your daily latte and brew coffee at home), but if the ritual of a morning cup of joe prepared especially for you truly makes you happy, then go for it! When you know what you value (whether it be security, family, convenience, heritage, adventure, and/or love), you will know exactly how you should spend your money in order to bring more joy into your life.
2. Buy more experiences and fewer material goods. John is a HUGE proponent of this strategy. And I think he’s right — people generally don’t reminisce about that great toaster they bought in the 90′s… they reminisce about the time they went to the Grand Canyon, or Aruba, or the mountains of North Carolina for a weekend away. Experiences take you out of your normal existence, they introduce you to new things, they make your life richer by having happened. In a phrase, they’re high impact spending. I also like that experiences bring joy even before they happen, as studies have shown that the largest boost in happiness around vacations comes from the simple act of planning a vacation. In the study, the effect of vacation anticipation boosted happiness for eight weeks!
3. Use your money to benefit others rather than yourself. This is a lesson that comes with growing older, I think, as we learn that it really is better to give than to receive. There are few things that please me more than choosing and handing over the perfect gift for someone, something that I know will improve their life and make them happy. Likewise, even if you’re spending 100% in line with your values (see no. 1), if you’re spending only on yourself, it will eventually start to feel empty if you never consider others. This short video (watch it!!) really drives that point home. There are very few ways to spend money that would be more rewarding, don’t you think? As I Like Giving’s tagline says, living generously is a surefire way to spend your money without regret.
4. Appreciate what you have. No. 2 might be John’s favorite, but this one is mine. If you want to spend your money well, learn to cultivate gratitude for what you have, and for the things that you buy. Buying only what you truly love makes this very easy. You might think I’m joking, but not a week goes by when I don’t say to John, “Man, I love this couch!” Our couch was one of the first “big” items we purchased on our own, and we saved for MONTHS to afford it. I loved it then, and I love it now. If you only buy things that you love, it will be easier to feel grateful for what you have instead of resentful and guilty about the clutter that surrounds you.
What do you think, my friends? Which one of these spending strategies resonates most with you?
P.S. Marget passed me this article a while ago, and though I only read the abstract, its findings definitely rang true for me!
P.P.S. Please don’t think by my second graphic I mean you should find your happiness in the accumulation of wealth; far from it. I simply mean that your money should be a blessing to you, not a burden; if it feels like a burden, you’re probably not spending it right.