People talk all the time about spending money the right way. But does believing that mean much of anything if you don’t know what you’re doing actually is wrong?
When you think about spending, your brain tends to lump it in with any time money goes out the door, but those who are smart about money and their finances will tell you that spending and investing money are two different things, along with knowing specifically how to spend the right way.
The masses tend to lump those two together, but we’re not talking about investing like in 401K or IRA funds for retirement but whether you consider something like a house, car or a vacation and whether or not you can discern between the two types of buying.
An investment is something that is a smart, steady and will not decrease in value or carries just that: value. A home is the obvious choice when you think about spending money and investing properly. You also can put something like continuing education or education in general as an investment that is going to cost you money, where you spend cash but in exchange for that get something in return that either leads to more money being made (i.e. the job training and schooling) or stability in the form of a return on that investment that translates into an investment that makes you money and doesn’t depreciate.
Depreciation can be linked to not spending wisely in two ways: spending on what loses value (like a vehicle for instance) or spending on something that you can’t track as being tangible, such as a vacation that you don’t need because you can’t afford it and subsequently you take anyway and charge it on a credit card.
This isn’t to suggest that you can never spend money on something that isn’t necessary a wise investment or an investment in any form or fashion. That would mean you can never take a vacation or buy something like a car, but the real translation is focusing most of your financial attention on choosing investing over spending as much as possible, not necessarily to do one thing but not another.
Spending wisely, to some, is more a matter of perception. They’ll argue that spending is a part of life, and you can’t get around it no matter how hard you try. The truth is that contingency isn’t completely wrong but their approach is totally off based.
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