ON PERSONAL FINANCES || Here’s an Unpopular Opinion on How You Should be Spending and Saving Your Money
Spend, spend, spend!
If you haven’t noticed, summer clearance sales on e-commerce shops began in June. There was hardly a summer launch season before retailers threw our inventory on steep discounts. It’s comparable to new movies going straight to the discount bin.
Yes — they’re sitting on a large amount of inventory from the past several years. From browsing the shops, I even noticed the same styles back on the rack from last summer. On the other hand, consumers are tempted by these amazing deals and are lining up to receive stale inventory and spend their hard-earned dollars. In times like this, when the economy is on the cusp of a potential recession, the best thing to do is to learn restraint in your finances. What’s in your pocket is still your money.
If you want to get your finances in order, you need to unlearn the impulse to spend money and tie your expenditures to your personal or career goals. Instead of forcing yourself to set aside a set amount each month into a savings account, what if you also gamified the process to support new, healthy life habits? Similar to reaching a new level in a game, if you gain experience and complete missions, what if you could do the same with your finances and reward yourself for completing goals?
Why is this an unpopular opinion? Because it requires work. Don’t we all wish that money would fall from the sky, that we could exert the same effort and earn an exponential amount? If you’ve already read to this point, then I will assume that you are ready to try our proven way of saving our way to wealth (and having some fun and encouragement along the way!) Instead of changing how you save and how much you set aside, you also need to change how much and how you spend.
You save by delaying expenditures, and you spend when you reach the goal that unlocks the spending.
For example, my year-end holidays are tied to whether I attained my annual goals. I don’t book the holiday before I know how I performed in managing my company this year. Did I hit my KPIs in terms of maintaining a profit margin? Did I hit my health goal to work out at least once per week and lower my cholesterol?
In other words, you can’t spend until and unless you’ve delivered. This method helps you cut back on impulse spending because you can only spend when you’ve hit the goals you set for yourself. If you continue to spend at the same rate, then at least it means you are hitting your goals consistently, which is a good thing.
While we would love to win the lottery, the more feasible and practical way of managing your finances is through self discipline.
Here are a few examples to get you started:
If you save $500 this month, then you can go for happy hour twice the following month.
If you work out twice weekly and hit your health goal, then you can spend $100 to reward yourself.
If you hit your career development goal at work, maybe you earn a new certification, then you earn the long weekend getaway you’ve been wanting to go on.
If your investments earn 10% this year, then you can buy yourself a $500 Christmas present. (The $500 is just a sample amount; your expenditures should not be more than a small, set percentage of your savings)
Notice how these are all if, then statements. You first have to do something, and actually do it well, before you can reward yourself. This isn’t a scenario where you set the goal to go work out once per week and go to the gym to sit there and do two sets, get tired then leave; that’s doing the thing but not doing it well.
Yes, it calls for discipline, and if you are reading this then let’s hope you are mustering up whatever discipline you have to get your finances in order. We live in a culture of instant gratification, and if you can delay gratification and tie your rewards to goals, then your new habits will provide positive reinforcement to keep you on the right track.
What I’ve learned from past goal setting experiences using this method is that you need to write it down and display it somewhere prominently to serve as a constant reminder. Don’t write it down in an app unless it’s set as a daily reminder for yourself, because once you close the app it’ll be out of sight out of mind.
Now, get a piece of pen and paper, write it down on a notepad, and stick it to your computer screen or fridge. Get it done today!
