There are some people who save their money to save it. They are the ones who can never have an emergency account too big. When asked what they are saving for, the answer will inevitably sound like something along the lines of, “Just in case.” They may never know what “just in case could be, and they may not want to think what disaster looms so larger that they could never afford it without their cushion.
Then there are people who save their money for a reason – to spend it. Once their money has reached a specific level, the account is wiped out and used for the intended reason, and (hopefully) the process begins again.
Is there an in-between? Can you actually spend your money without being considered reckless? Yes! It is possible, and even enjoyable, to spend your money within reason. Follow these few guidelines to know how to have fun with your money.
Learn Your Money Personality
Before you do anything, you should consider learning how you approach your finances. Are you methodical and slow to act? You might be the Tortoise. Maybe you spend everything on fun stuff before you have a chance to pay your bills. If so, you could be a Funster or even a Whirlybird.
The more you know about your own personal approach to money, the better you can change the behaviors that land you in hot water—and enhance the traits that further your financial future while still knowing how to have fun with your money.
Don’t Spend More Than You Have
Debt is not fun. Too often, a young person with their first credit card will be out of control in purchasing. Things always seem more affordable when you are using plastic. Reality hits when the bill comes and all those purchases have added up to an outrageous amount. If you keep in mind the total amount you can’t exceed and track your shopping, the bill shouldn’t come as a shock. Just be prepared to pay more than minimum or not keep a balance at all. Or, only make your special purchases when you have the cash to do so.
To counter the above, this doesn’t mean you can’t have and use a credit card. They are actually useful in building your credit history. However, it’s only a benefit if you are able to pay off what you owe and don’t wind up swimming in the interest debt that follows.
Include It in Your Spending Plan
Hopefully, a spending plan is something you already have in place. If not, please feel free to click the previous link and download our free version. You may not know what that special expenditure is ahead of time, but it doesn’t mean you can’t plan for it. Your first annual budgets may need to be flexible as you figure out what costs are in your daily life. Once you have your budget relatively fixed, you’ll have a better idea of what your disposable income is and how long it might take to reach your goal.
Don’t Rob Peter to Pay Paul
The first thing you should do when you get a paycheck is to pay your bills. True, this is not the fun part. However, the fun part comes in seeing what you have left. If you have been keeping with your spending plan, and you find that space has come for the “extra expenditure,” (see above) then the time is right. If, however, your utility bills, grocery bills, etc., wound up being a little higher than you had planned, you may need to hold off a little before splurging on something extra. Bills must be paid first.
Frugality may be responsible, but it doesn’t have to mean spending money is irresponsible. Make sure you are allocating your funds appropriately, you don’t incur too much debt, and you continually restock your supply of flexible income, and you’ll be just fine. Maybe you can even show your friends how to have fun with their money! Still overwhelmed by your finances? Contact us today for a no-cost/no-obligation financial review.