Neil Diamond sang, “Money talks, but it don’t sing and dance and it don’t walk.” Although, it can run (out of our accounts). When that happens, it’s time to get intentional about managing it. Here are eight things I’ve learned about spending money.
Have a maximum of two credit cards and pay them off every month. More on this in a later post.
When buying a car, pay cash and avoid monthly payments. If that’s not an option, we pay the maximum amount we can afford for the down payment. The less money we borrow, the better off our credit score is. Car loans are the devil. Vehicles depreciate so quickly that we can easily get upside down (owing more on the car than it will sell for).
Invest in quality. My job requires me to make a good impression, so I buy quality clothing, haircuts, handbag, briefcase, etc. When I buy cheap clothes, I end up replacing them more often than if I’d just purchased quality in the first place. That’s not even taking into account the time (and gas if I go to a brick and mortar) I waste looking for replacements.
Protection plans on laptops, mobile phones, etc, are usually not worth it. Instead, I put aside the amount a new cell phone costs in our savings account. Then I can replace it whenever I want, even if it’s not broken.
Don’t buy on impulse. I’m a bit extreme on this one. I waited 48 hours to buy the $1.29 text tone I wanted. But waiting instead of buying is in my best interest more often than not. I even carry an item around the store for a while and think about how often I’d use it, if it’s really necessary, how much joy it would spark, etc. before heading to the check out. Usually, if I can easily live without it, I do. If I regret my decision, return to the store, and it’s still there, I buy it.
Pay bills electronically through the bank rather than through the company billing me. The fewer companies that have my bank account numbers, the better. I make bill paying a weekly habit. If nothing is due, I’m still consistently keeping an eye on where the money is going and when.
Think about the total cost. If I’m at Kroger and I know a loaf of bread is a dollar cheaper at Aldi, is it worth the time and gas to go there just for the one item? If I spend $10 for a drive-thru lunch, how much money would I have saved if I’d brought my lunch to work?
Spend less than I earn. Living modestly and within our means brings peace of mind; which I can’t put a price tag on. Having money left after paying bills means we can put it in savings. I know some people feel restricted by saving instead of spending, but it gives us so many choices: More money in retirement, the ability to pay cash for Christmas gifts, a vacation. Money is a tool. When we use a tool wisely, it makes life easier.
Do you have any suggestions for spending money wisely? Please share them in the comments section.