Happiness lies in spending money where you spend most of your time, according to a recent New York Times article.
As a financial planner, I’ve echoed this message for years encouraging people to think through what they spend their money on and the impact of those purchases.
Glamourous vacations and killer wardrobes can bring a smile to just about anyone’s face. Those are momentary purchases that don’t have a shelf life. Instead of buying experiences, why not considering shelling out cash to upgrade your everyday life? Spending your money on smart purchases to improve your life can have long-lasting benefits. Here are three steps to evaluate if your spending is working for you:
Understand that it’s all about balance
Marie Kondo’s The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organizing* book and now Netflix® series is sweeping the world by storm. If you think about it, at the core, Marie’s motto is life in moderation and balance. She has created her own system to help others tidy up their space and find balance with the items in their life that spark joy. Feeling better about the tidiness of your house, the place where you spend most of your time, can have long-lasting effects on your overall wellbeing.
Why not also tidy up areas of your finances and re-think where you are directing your cash? Whether you receive a large tax refund or score a hefty raise at work, having a plan for how you’re going to spend your money is just plain smart. As a financial planner, my message is always about balance. You may want to focus on finding a sweet spot between spending money to upgrade your life, spending money towards your financial goals, and spending money to have a bit of fun.
With this balanced approach, it would only make sense to consider allocating some money towards upgrading the areas of your life where you spend the most time. For instance:
- A new bed that helps your quality of sleep improve
- A new car to improve your gas mileage and reduce the cost of maintenance repairs
- New cookware to motivate you to stay in and cook dinner
- A new office chair to use when you work at home that is back friendly
There are so many examples of smart purchases that will directly have a positive impact on your life and your health. Striking a balance between upgrading the areas of your life where you spend the most amount of time and spending money on things that make you happy and further your goals is the name of the game.
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Know the value of your purchases
Everything that you spend your money on has value. It could be as simple as a cup of coffee to give you a little extra mojo in the morning, or a pair of amazing new sheets to make you feel good when you go to sleep. Being aware of the value of your purchases can help you save and spend your money wisely.
The temptation is to spend your money on things that are short-lived, like an exotic trip to Bali or an expensive meal out on the town. While these experiences are memorable, they generally lack a lasting impact on your everyday life. However, there is certainly a place and a time to indulge yourself, and you are probably the best judge of when that’s the case.
Take an inventory of your home and time
A great exercise is to take inventory of your home and the areas where you spend most of your time. Think about your house, your bedroom, your kitchen, your car, and your work location and create a list of ways to improve your quality of life in those areas. Sort your list with this criterion in mind:
- What is the cost of the item that will improve your quality of life?
- How much time do you spend on average with this item?
- Give each item a rating of 1, 2, or 3 ranging from 1 (critical) to 3 (important, but can wait).
- Take a look at how much excess cash you have to spend and divide it up based on your ranking system.
- You can even put a date next to each item so you can plan ahead, and still have some money left to spend on your fun purchases.
Don’t feel like you need to uplevel in every area of your life. Many larger purchases can have a dramatic impact on other areas. For instance, a new high-quality mattress, which can increase your level of sleep, and also impact your overall wellness and diet management. These types of purchases where you can identify more than one impact area are probably smart ways to spend your money.
Paying off debt and other financial goals are essential to building a strong financial foundation. As well, splurging on a trip or luxury clothing item is fun for anyone. However, next time you come into a stash of cash, think about areas of your life you could upgrade that would have a dramatic impact on your daily living. Taking some time to think through where you’re spending your money can bring a great deal of balance into your life.
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Shannah Compton Game is a CERTIFIED FINANCIAL PLANNER® professional with an MBA and is the host of the award-winning podcast, Millennial Money, where she shares totally relatable and easy to understand financial advice that will actually make you want to talk about money.
Haven Life offers this information as general education only. Haven Life does not endorse the companies or offer the products, services and/or strategies discussed here. Opinions expressed by the author(s) are their own and do not necessarily represent the views of Haven Life.