Healthy spending

Come to think of it, there’s only so much you can do with money. In fact, money can be either saved or spent. Depending on who you ask, the smart choice of what you should do with your money is borderline on these extremes; spend it because you only live once or save it because rainy days are inevitable.

Life is, however, more of a system of balances than it is of extremes. In most cases, the natural approach is to find a midway point.

In dealing with your finances, this is the same approach you should embrace and not just because it is the natural way. Simply it is an established method of gaining financial independence while enjoying all that life has got to offer.

But just how exactly do you strike this delicate balance? It’s easy.

  • Spending wisely on things you need

There’s so much to want in today’s bubbling and exciting world. New cars (sportier and more luxurious than your last one) are released every other month; technology is evolving at alarming rates; there’s always a tastier cuisine to be tried at that fab restaurant or local McDonalds. The trend here is easy to spot; wants are insatiable. As long as you exist, expect to be flooded by a sea of essential or non-essential desires.

The distinction between an essential want and one that’s merely a product of our insatiable lust, is what defines a need. In this context, a need is first and foremost an essential that is affordableand improves the quality of your life.

Affordable in the sense, that ideal needs should not pose a threat to your financial stability. This is how your money should be spent.

Let’s put it into perspective, consider a banker who needs a method of commute to his/her workplace. Public transit is probably the least expensive option. However, to relieve the headache of public transportation the most common solution would be to purchase an affordable vehicle. The banker could equally purchase a luxurious car; however, such a choice would only fulfill one of the criteria we’ve used to define an ideal need – improving the quality of life. Given his financial standing purchasing a Ferrari would undoubtedly run him into debt.

This method of passing your needs through a filter screen of affordability and how much value it creates, provides a clear-cut mechanism for determining what is worth spending on and what’s excessive.

  • Approach saving as a need and not a luxury

In creating a balance between wholesome living and financial stability, one mistake most people make is to classify savings as a burden rather than an essential need. People are likely to save willingly for a purpose (i.e. a new house or a vacation) whereas saving for a rainy day poses some difficulty as there is no means to an end.

This perspective of savings is one that can be best described as shortsighted. Aside from the fact that saving is an eternally proven means of guaranteeing a high quality of life.  However, in planning for the future the importance of having savings can be beneficial as you never know what life might throw your way.

While there’s no universal savings/investment guide, the consensus among financial experts is the earlier, the better. When you start early, saving with your projected goals in mind becomes less expensive. Paired with the conservative process of defining what’s a need and what’s not, it’s a surefire way of achieving financial independence while living the best life possible.