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Are You Spending or Investing Your Hard Earned Money?

Are You Spending or Investing Your Hard Earned Money?

According to Australian Millionaire, Tim Gurner, our inclination towards frivolous items such as Avocado Toast are the reason why millenials can’t afford to put a down payment on a home.

As outlandish as this observation may sound, there is some truth to it. I seriously doubt that your decision to eat avocados is going to deter you from ever buying a home. But the act of irresponsible spending certainly will. The future is some far-off, unknown entity, and those of us who like to live in the now tend to indulge instead of invest. And while that instant gratification feels oh so good, eventually it will catch up with us. We need to start planning ahead.

Don’t squander away your hard earned money

We’ve been hearing it over and over since we were children. Our parents would give us a small allowance and tell us, “don’t spend it all in one place.” We may have laughed it off, but they were trying to teach us a very valuable lesson: we need to spend our money wisely.

We have reached an era where adults between the age of 24-35, what used to be ample home-buying age, are not able to afford a home of their own. A number of factors contribute to this issue: Credit standards have become stricter, making it more difficult for people with faulty or no credit at all to get a loan. Student loans are on the rise, burying millenials in crippling debt. Lifestyle changes- people are delaying getting married and having children, no longer prioritizing this as their ultimate goal. Many millenials are not receiving salaries that make them able to afford a home; many of them are living hand to mouth. Individuals in this age group are inclined to move to inner cities, where the act of renting is more prevalent than buying.

Ultimately, you don’t have to save up your money in order to buy a flat or home. If that’s just not your style, then do what makes you happy. But still be aware of your spending habits. Like I said, you work hard for your money. By all means treat yourself, but also consider the time you’ve put into earning that cash. It won’t be instant, but investing in yourself now will pay off big time in the future.

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Avoid these money spending mistakes:

1. Don’t be a sucker for a seemingly “good deal.”

Imagine you’re in the market for a new television set, and you’ve narrowed it down to two choices. Both televisions are priced at $500, but one of them has been marked down from $800. Immediately you conclude that the one that has been marked down would be a better value. This thought process is known as Anchoring Bias. This means that we make decisions based on one piece of information (the anchor). In this case, the discount is the anchor. You don’t know why the store chose to discount this item, and what issues it may have.

I’m sure we’ve all been guilty of naming ourselves, “bargain shopper,” never being able to pass up a good deal or sale. Many of us fall victim to this marketing tactic during the holiday season. Everything is on sale! And since we can’t resist a good sale, we spend money we normally wouldn’t, on items we normally wouldn’t buy. The end result? We just end up with stuff. Stuff we don’t need, and doesn’t bring us any fulfillment. If anything it makes us feel empty, because everything new eventually loses it’s charm.

2. Buying the things we WANT, instead of what we NEED

Do you ever find yourself sifting through your bottomless closet, filled with nearly identical shirts and shoes, only to realize you have “nothing to wear? Shop Therapy make us feel good. But only momentarily. How good will you feel about those items when you realize you can’t pay your bills?

It is exciting to get something new, and in the moment, we believe that this new item will help to shape us into the person we want to be (this jacket makes me look professional, more people will take me seriously). But the truth is, these items won’t change us. And we’re likely to lose interest in them just after a few days.To avoid this dilemma, really consider how much you need an item before you buy it. Don’t buy it on impulse, wait until the next day and consider if you really need it. Chances are you’ll forget about the item.

3. Spending money we don’t have

You just got your first credit card, and your soaring high on the possibilities. You can just buy things without worrying about your account balance. So you buy. You buy until you max out your credit card. So what do you do? You apply for another credit card to support your spending habits. Next thing you know, you’ve racked up $20k in debt with no way to pay it off. Your credit score plummets and your phone is ringing off the hook with debt collectors.

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The money isn’t tangible, so you don’t feel any real loss as you’re spending. Credit cards make spending way too easy, and debt that much easier to fall into. You can easily miscalculate how much you can afford; or worse, go into denial about how much you’re spending.

This is why so many adults are buried in debt. Since they don’t physically see the money leaving their bank accounts, they’ve disassociated the loss that comes with spending.

4. Buying instead of investing

Say that you’re an Instagram star, promoting a vegan lifestyle and the benefits it provides. You could spend $1000 on a new hand bag, OR, you could spend that money on a Nutrition Certification Course. Consider which is more beneficial to you: buying an expensive handbag that you’ve had your eye on, or investing in something that could potentially further your progress in life?

Sure, you’ll get that temporary high from buying that handbag, flaunt it around and be the envy of the town. But as soon as you’ve felt that satisfaction, that handbag no longer benefits you. It’s old news. However, if you spend it on the Nutrition Course, you could be well on your way to expert status on a subject that truly interests you. That is a benefit that will pay off for years to come; well after that ragged old handbag fell apart and became useless.

Never let the instant gratification trump you from investing something more rewardable.

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5. Trying to “buy” a relationship.

Your relationship has been on the rocks for a while, and you’re not really sure how to show them that you care. So you buy them tokens of your affection, showering them with gifts. This may temporarily fix the tension in the relationship, but the core issue is still there.

If your partner is only with you because of what you can offer them materialistically, then you should know it isn’t real. You shouldn’t have to buy your friends or romantic partners with extravagant items. If your partners love for you is determined by how much you spend on them, then they don’t love you for you. They love your money and what it can get them.

You are buying the relationship; an investment that will ultimately end in loss.

6. Opting not to invest in Health Care.

You take great care of your body. You eat right, work out daily, and take all of your vitamins. You feel great! There’s no need for health insurance, your health is just fine. One day on one of your runs through the park, you slip on some mud, fall awkwardly, and fracture your neck. An ambulance picks you up and takes you to the hospital. They perform x-rays, cat-scans, keep you overnight for observation, and provide you with painkillers to alleviate your suffering. When all is said and done, you now owe the hospital just shy of $30k. Your health was in great shape, but you just can’t predict these things. If you had health insurance, you wouldn’t have to worry about these costs on top of your injury. But now you do.

Millenials may feel that they don’t need to waste their money on Health insurance, because they’re still young and still have plenty of energy to spare. Health isn’t the first priority, because time and age is still yet to take a toll on us. But before we know it, our bodies start to give out on us. We eventually will age, sending our energy levels and health on the decline.

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Now, health insurance or not, you need to seek medical attention. And without coverage, your payments will be astronomical. An issue you never would have dealt with if you just sucked it up and made the monthly payments. Maybe you don’t need it now. But someday you will.

Invest in yourself and the future, and the payout will be well worth the sacrifice

When you really break it down and consider what is important, you realize you don’t actually need very much. What do you actually need? Your health, food (if that includes avocado toast so be it), water and shelter (clothing optional, but for the purpose of social norms I suppose we’ll include that as well).

Featured photo credit: Mashable via google.com

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Brian Lee

Chief of Product Management at Lifehack

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Last Updated on May 26, 2020

Top 10 Reasons Why People Don’t Reach Their Goals

Top 10 Reasons Why People Don’t Reach Their Goals

With everything that happens around us, it is sometimes difficult to reach our goals. This is compounded if you have any of the reasons on the list below.

Luckily, in addition to the top 10 reasons why people don’t reach their goals, I’ve included a quick fix for each of them. So let’s get to it.

1. Creating Vague Goals

When you don’t know where you are going, it is really hard to get there. Many people set themselves up for failure when they set goals that are unclear. “I want to lose weight” sounds like a great goal but the people who set this kind of goal will never reach it. It is not because the people are not motivated or disciplined but because the goal is too general. Do you want to lose 5 lbs or 50 lbs?

Quick Fix:  Set SMART goals by being Specific, making sure they are Measurable, Achievable and Realistic, and last but not least — give yourself a Time deadline. If you want to go one step further, you may want to read The Missing Letter in Your Smart Goals.

2. Lacking a Higher Purpose

Goals can be set on any topic imaginable but if you don’t have a higher purpose, it makes it is easy to give up once the initial motivation and excitement wears off. Understanding how your goal is relevant to you allows you to persevere even when the going gets tough.

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Quick Fix: When setting your SMART goal, ask yourself how the goal is relevant to your life and what you want to achieve.

3. Procrastinating

Even when you have SMART goals that are relevant to your purpose, if you don’t get started, you’ll never achieve your goal. One of the most dangerous phrases is “I’ll do it later.”

Quick Fix: Make sure the goal has been broken down into manageable pieces and then start right away. Here are 11 Practical Ways to Stop Procrastination.

4. Not Taking Responsibility

Things will go wrong. That’s a fact of life. When something comes up and you don’t achieve your goal, who do you blame? Your boss who kept you at work late so you couldn’t work on your book or maybe the horrible weather that stopped you from going to the gym. If it’s not your fault, there is nothing you can do, right?

Quick Fix: Own up to not reaching your goals. When you take responsibility, you’ll become resourceful knowing that you have control over the attainment of your goals.

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5. Listening to People Who Discourage You

When you go for your goals, especially the big ones that really count and fit in with your purpose in life, it is inevitable that people will discourage you. There are many reasons for this: concern, jealousy, ignorance, etc. How many goals have already been given up on because other people decided they were not worth pursuing?

Quick Fix: This one is easy. As long as you know the purpose for your goal, ignore the naysayers. You can take what they are saying into consideration but make sure you make the final choice.

6. Starting Too Many Projects

I’m a starter. That sounds like a good thing but not when you start too many things, you don’t end up finishing many of them. This usually stems from the fear of missing out (FOMO) or being someone who has many ideas.

Quick Fix: Understand that you have a limited amount of time and that you can’t do everything. To deal with FOMO, realize that by not finishing, you are missing out on all the opportunities that open up when you finish the projects you are working on.

7. Being Negative

If you think you’re not going to make it, then you’re probably not going to make it. If you don’t believe you’re going to reach your goal, then when you fail, it is expected which makes it easy to stop trying. When you are optimistic and a setback occurs, you focus your energy on finding solutions because you truly believe there is one. If you believe that you suffer from bad luck, check out this article.

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Quick Fix: Consider the idea that optimism and pessimism are both expectations of the future. Each are equally likely to be true but which belief will help you lead a happier more fulfilled life? Instead of wasting your energy on complaining, spend that energy on learning.

8. Being Selfish

There are people out there that think it is silly to help others. They believe in taking and not giving. They are misers with their time, money and knowledge and are only interested in opportunities where they stand to benefit. Most big goals require the help of others and it is very difficult to help people who only care about taking.

Quick Fix: Serve others first. Always look for ways to add value to other people.

9. Surrounding Yourself with People Who Don’t Reach Their Goals

You are who you associate with. This may be hard to swallow for some people and there are always exceptions to the rule but for the most part, we act in accordance with the people around us. This comes from the strong ad natural desire to belong and to be accepted (think of all the dumb things you did in high school just to fit in).

Quick Fix: Associate with people who always reach their goals.

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10. Watching Too Much TV

Not all TV is bad but if you are watching TV then most likely you are not doing anything to move one step closer to your goal. The problem with TV these days is that it is captivating. There are programs for all interests and hobbies and the shows keep getting better and better. Those who watch alot of TV usually don’t reach their goals and perhaps people watch TV because they don’t have any goals.

Quick Fix: Shut off the TV. Cancel the cable. Pick up a book that will help you move one step closer to your goal. Here are 6 Steps to Remove TV from your Life.

Do you have anything to add? What do you think are the reasons why people don’t reach their goals and what are your thought about the 10 reasons we have listed here. Feel free to give your own effective quick fixes for the different reasons in the comments section below.

Featured photo credit: Kyle Glenn via unsplash.com

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