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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 July 21, 2021

The Importance of Reminders (And How to Make a Reminder Work)

The Importance of Reminders (And How to Make a Reminder Work)

No matter how well you set up your todo list and calendar, you aren’t going to get things done unless you have a reliable way of reminding yourself to actually do them.

Anyone who’s spent an hour writing up the perfect grocery list only to realize at the store that they forgot to bring the list understands the importance of reminders.

Reminders of some sort or another are what turn a collection of paper goods or web services into what David Allen calls a “trusted system.”[1]

A lot of people resist getting better organized. No matter what kind of chaotic mess, their lives are on a day-to-day basis because they know themselves well enough to know that there’s after all that work they’ll probably forget to take their lists with them when it matters most.

Fortunately, there are ways to make sure we remember to check our lists — and to remember to do the things we need to do, whether they’re on a list or not.

In most cases, we need a lot of pushing at first, for example by making a reminder, but eventually we build up enough momentum that doing what needs doing becomes a habit — not an exception.

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From Creating Reminders to Building Habits

A habit is any act we engage in automatically without thinking about it.

For example, when you brush your teeth, you don’t have to think about every single step from start to finish; once you stagger up to the sink, habit takes over (and, really, habit got you to the sink in the first place) and you find yourself putting toothpaste on your toothbrush, putting the toothbrush in your mouth (and never your ear!), spitting, rinsing, and so on without any conscious effort at all.

This is a good thing because if you’re anything like me, you’re not even capable of conscious thought when you’re brushing your teeth.

The good news is you already have a whole set of productivity habits you’ve built up over the course of your life. The bad news is, a lot of them aren’t very good habits.

That quick game Frogger to “loosen you up” before you get working, that always ends up being 6 hours of Frogger –– that’s a habit. And as you know, habits like that can be hard to break — which is one of the reasons why habits are so important in the first place.

Once you’ve replaced an unproductive habit with a more productive one, the new habit will be just as hard to break as the old one was. Getting there, though, can be a chore!

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The old saw about anything you do for 21 days becoming a habit has been pretty much discredited, but there is a kernel of truth there — anything you do long enough becomes an ingrained behavior, a habit. Some people pick up habits quickly, others over a longer time span, but eventually, the behaviors become automatic.

Building productive habits, then, is a matter of repeating a desired behavior over a long enough period of time that you start doing it without thinking.

But how do you remember to do that? And what about the things that don’t need to be habits — the one-off events, like taking your paycheck stubs to your mortgage banker or making a particular phone call?

The trick to reminding yourself often enough for something to become a habit, or just that one time that you need to do something, is to interrupt yourself in some way in a way that triggers the desired behavior.

The Wonderful Thing About Triggers — Reminders

A trigger is anything that you put “in your way” to remind you to do something. The best triggers are related in some way to the behavior you want to produce.

For instance, if you want to remember to take something to work that you wouldn’t normally take, you might place it in front of the door so you have to pick it up to get out of your house.

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But anything that catches your attention and reminds you to do something can be a trigger. An alarm clock or kitchen timer is a perfect example — when the bell rings, you know to wake up or take the quiche out of the oven. (Hopefully you remember which trigger goes with which behavior!)

If you want to instill a habit, the thing to do is to place a trigger in your path to remind you to do whatever it is you’re trying to make into a habit — and keep it there until you realize that you’ve already done the thing it’s supposed to remind you of.

For instance, a post-it saying “count your calories” placed on the refrigerator door (or maybe on your favorite sugary snack itself)  can help you remember that you’re supposed to be cutting back — until one day you realize that you don’t need to be reminded anymore.

These triggers all require a lot of forethought, though — you have to remember that you need to remember something in the first place.

For a lot of tasks, the best reminder is one that’s completely automated — you set it up and then forget about it, trusting the trigger to pop up when you need it.

How to Make a Reminder Works for You

Computers and ubiquity of mobile Internet-connected devices make it possible to set up automatic triggers for just about anything.

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Desktop software like Outlook will pop up reminders on your desktop screen, and most online services go an extra step and send reminders via email or SMS text message — just the thing to keep you on track. Sandy, for example, just does automatic reminders.

Automated reminders can help you build habits — but it can also help you remember things that are too important to be trusted even to habit. Diabetics who need to take their insulin, HIV patients whose medication must be taken at an exact time in a precise order, phone calls that have to be made exactly on time, and other crucial events require triggers even when the habit is already in place.

My advice is to set reminders for just about everything — have them sent to your mobile phone in some way (either through a built-in calendar or an online service that sends updates) so you never have to think about it — and never have to worry about forgetting.

Your weekly review is a good time to enter new reminders for the coming weeks or months. I simply don’t want to think about what I’m supposed to be doing; I want to be reminded so I can think just about actually doing it.

I tend to use my calendar for reminders, mostly, though I do like Sandy quite a bit.

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Featured photo credit: Unsplash via unsplash.com

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Reference

[1] Getting Things Done: Trusted System

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