The art of spending money

Wealth is the ability to fully experience life.

Henry David Thoreau

Out of the many ways to divide people into groups, the way people spend money is not an obvious one. Money is a no-no topic in polite conversations, and we rarely think about how other people spend their own money.

However, knowing how to properly and rationally spend money makes a huge difference. Moreover, mastering the art of spending money will make financial life easier and worry-free. Growing your wealth, financial or other, by learning proper spending will truly help you fully experience life.

Think a lot. Worry less.

People who know how to spend money (those who do not fret and make rational decisions) have a strategy they follow and a financial plan that is right for them.

Strategy – should include things like your short term and long term goals, your plans for savings and investment, safety checks for financial disasters (insurance, help from other people). Mostly composed of qualitative goals with few broad numbers.

Financial plan – how you’re going to earn, invest and spend money. Best done as a spreadsheet. Write down all of your income, your monthly spending, all of your investments. Be as thorough as possible, and don’t forget to include smaller details like weekly percentage changes and commission charges for your investments. This is the place to track your financial goals according to your own strategy. Goals based on your financial strategy should be written in bold letters, and you should hold yourself accountable to them.

When a person has a personalised financial strategy and a plan based on it, spending money becomes easier. Why? Because now you have an answer to every financial decision you need to make. Just spend money according to your financial strategy, and invest to meet your short and long term goals.

Coming up with a strategy and a financial plan will take up a lot of your time. Making decisions based on them will minimize indecision and worries that surround everything related to money. In the end, you will see that “Think a lot. Worry less.” is really true.

Take advantage of hidden opportunities

Apps and companies like ETFmatic, Swissquote (use the code 3k2942, deposit 100CHF and get 100CHF for free), Freetrade.io and similar can be hard to find, but they are great for creative savings and investing strategies. Take ETFmatic, for example. It is a robo advisor ETF (exchange traded fund) app. You transfer money to the app, and robo advisors invest that money into ETFs and bonds. There is no need for daily worries about how your investment is doing, as it is invested in mostly lower risk avenues, compared to stocks and financial derivatives.*

If you are based in USA, you can take advantage of apps like Acorns and Robinhood. Overall, the market of savings and investment apps in USA and Europe is on the rise. The sad thing is, that these apps can be hard to find. If a person does not know about them, investment apps are rarely in the main pages of news websites or even finance-related websites.

I believe that taking advantage of the hidden opportunities offered by financial apps is one of the ways to spend money without many worries, while gaining great benefits. After all, what’s better than seeing that the 50 euros you invested has made 5 euros without you doing anything?

Shop in the right way

Everyone probably knows a family member or a friend who does their shopping without any apparent plan. They buy things they don’t need, don’t take advantage of product discounts and can even forget to buy the goods they actually need. This blog examined the ways how to save money while buying groceries. The main rule is having a plan before making any purchases. The same rule applies to all shopping types. Don’t buy clothes, shoes or travel packages if you don’t have a plan.

Having a pre-determined spending limit and knowing your own requirements for a product you’re going to purchase, will save you many worries about your financial situation at the end of the month. You will save yourself from disappointment if you know what exactly you want in a product, and a salesperson won’t take advantage of your indecisiveness.

Shopping in the right way also depends on your outlook about your purchases. If a person is shopping while sad, angry or depressed, they will likely purchase things they don’t need, in order to make themselves feel better. It’s also likely that they will feel too much emotionally tired to think about sales and discounts.

Shopping is best done with a positive, but slightly guarded emotional state. That way, the shopper won’t make impulse purchases and will have the necessary will to search for discounts and to calculate if they are worth the shopper’s money.

A smaller tip for shopping in the right way is using bonus programmes and taking advantage of financial life hacks. Small things like these always add up to big savings. Use these tips and bonuses to shop in the right way.

A risk will be worth it

The art of spending money and creating wealth to fully experience life is based around measured and conservative methods. However, we all have read about or know a person who did not buy Google stock, Bitcoin or some other product while it had a low price. People who did not give investment to entrepreneurs whose businesses later skyrocketed.

Having conservative spending habits will likely prevent an unfavourable financial situation or getting into debt. The problem is, those who do not make calculated risks can rarely see true wealth. If your gut tells you to purchase up-and-coming stock or invest into an IPO, research these opportunities carefully. If they seem like a safe way to invest, do it. Because the real art of spending money is based around planning and calculated risks.

*- This is not investing advice. Any risk an investor takes is only their own. Only the investor is responsible for any gains or losses he or she experiences.

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Categories: Lifestyle, Shopping

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  1. Industries to watch for the coming dip « Money Bear Club
  2. Investing late in life: investing for retirement part 2 « Money Bear Club

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