We all hate to be told that we can’t do something. Whenever I’ve discussed ways to save money in your everyday life, my readers would get turned off.
When I would discuss strategies on how to cut back without giving up, my readers responded favorably.
Today, I wanted to try something different with the younger readers of Frugal Dad. I wanted to tell you to go ahead and spend the big bucks...BUT. Yes there’s a catch. Actually there’s a few catches (isn’t there always?):
You need to make big money before you spend big money.
You need to ensure that you’re at a stage in life where you’re earning a decent chunk of change if you want to buy that new Infiniti G35. Many college graduates are guilty of extreme lifestyle inflation. If your big spending results in you saving less than you would like to, it’s still somewhat justifiable. If your big spending is paid for by credit card, then you’re headed towards a financial disaster. Even worse is when low-income earners want to spend the big bucks before they’ve even reached the stage where their income justifies it.
The other day I heard yet again another story of a friend that just graduated college, started making a little bit of money, and is already living an extravagant lifestyle. Instead of saving up a buffer in his savings account, he decided to spend 15 grand for two people to go to Australia. I’m all for long term travel and working abroad, but, I’m opposed to spending the big bucks before you’ve saved any bucks or have earned any money to justify your spending.
Where are you cutting back?
If you want to allocate a lot of your income towards one spending area, it’s advisable that you cut back in other areas. I love to go out with friends. Instead of forcing myself to stay in or making my life miserable, I find ways to cut back on other areas. I try to prepare as much of my own food as possible. I try not to indulge in the newest fashion trends. I truly believe that uniforms don’t win games. So I would rather not jump on the newest trends just so that I can have more money for going out with friends.
The key point here is that if you want to spend big money on a specific area, you need to try to cut back somewhere else. If you don’t then you’ll never have any money leftover. Even worse, you might end up in massive amounts of debt. The last thing you want to happen early on in your working career is to rack up debt. The debt will just prevent you from moving on with your life (moving out, getting married, etc.).
You must plan your spending
I’m not here to judge anyone. I’ve spent more money on trips the last few years than celebrities do on plastic surgery (well not really). The reason that I get away with spending the big bucks here is because I plan ahead FAR in advance. I recommend that you find the best online banking account for your situation. This way you can plan all of your expenditures and know where your money is going.
Instead of always stressing about your money and trying to figure out where your hard earned money is being spent, plan ahead. I try to keep a few sub-accounts in my online bank account with ING Direct. This way I can roughly plan my spending for the short term and the long term.
Admit your weak areas.
We all have areas where our spending is horrible. There’s no point to lie about it. Just admit to it and try to slowly work on it over time. The quick fix almost never works (just like dieting) and you end up worse off in the end. If you acknowledge that you spend too much money on eating out, you can begin to improve your spending in this area. There’s no point to deny or to seek a quick fix. Both options will hurt your financial future. If you get realistic and serious about your money management skills, then you’ll eventually notice a big difference in your bank account and your quality of life.
There you go guys. A personal finance article giving you permission to spend the big bucks. What do you think? Where do you spend the big bucks? How do you plan your spending?