You know that great feeling of learning about a pay raise, landing a huge gig, or that long time client who owed you months ago finally paid? What do you think of first? Is it to buy something you’ve been eyeing for a while, go on an expensive dinner or delay life for some time and take a day off at the beach? How you answer that question matters, because when more money confront us, our instinct is to “reward ourselves” immediately.
So, when we start earning more, the usual consequence is, we also spend more. We feel like we deserve new, expensive stuff because we have to live up to a certain lifestyle. This immense need to ugrade is also known as lifestyle inflation. Cellphone and car companies release new models every year. These, as major status symbols, are usually where money goes. And, with the power of lay away plans for jewelry, easy installment terms on most gadgets, furniture and even real estate, it’s apparent how easy shopping and upgrading has become. The ending? Most millenials still find themselves broke.
In this article, I will help you spend your money on the right things without feeling like you’re holding back. After all, who wants to be broke at 30, right?
Get Rid of Debt
It’s normal to have a few credit card debts for big ticket items that you’ve chosen to pay in increments. However, just remember that debts will grow over time if you don’t manage them well. So make a list of all your debts – credit cards, debts from parents, relatives, friends, business loans, etc.—and make a plan to pay them off smoothly. And remember, try to avoid more debt as much as you can. Even if you have some money in bank, but your debt is also ballooning, your net assets are still low. This way, you’re not really improving your financial standing, you’re just masking your liabilities.
Increase Your Savings and Investments
When you receive a raise or a big amount coming, don’t forget to pay yourself first. Increase your savings and investment. You can start small. For example, for this year you can set aside a bank account and put P1,000.00 every month. Next year, increase your savings to P2,000.00, then P3,000.00 the next and so on. After a while, you will find yourself excited to see your cash nest grow and you will actually look forward to going to the bank to save. You can also try to get cozy with the idea of investing. It can be as simple as buying gold/ jewelry, a small stock market investment (starts at P5,000.00) or buying pre-sold residential lots (starts at P2,500.00 a month).
Remember What You Truly Love (And Those That Are Cheap)
This one’s pretty simple and you can save a lot by following these top 3 rules: eat at home, take public transport, try not to upgrade your car too soon. Traffic is not really toxic in Davao so you can just take a cab anytime. If it’s raining, it’s going to be a little hard but give it 15 or 20 minutes and you’re good to go. If you own a car, think about your needs first. Don’t upgrade if you don’t really need it. If your car works fine and you just need basic transportation 95% of the time, just keep it for a while. Maybe you can hold off that car upgrade for longer. Most of all, remember the things that you love, those which are cheap. Instead of getting a high end mani pedi, eating at an expensive restaurant or getting a massage, try getting a cheap pedicure and foot reflexology at a cheaper place, buy viand from your favorite karinderia or take a long hot bath instead of a massage. You’ll be surprised how you can be content with a lot of cheaper stuff.
Spend for Experiences Rather than Just Material Stuff
When you do feel like spending and think that you truly deserve it, spend on experiences and travel rather than on material things. This way, it is more of a life investment and a learning process, not just another occupied space on your closet. A material thing can give you the feeling of contentment for a while but a wonderful experience will be a memory worth revisiting as long as you live.
So go, you! Spend wisely and think of the future before you give in to impulsive buys. It’s nice to treat yourself once in a while, but having a rich nest of investments, savings and vast experience is waaaay better.