In order to be successful at saving money, you need to spend money.
At times, the constant “stop spending, save more” mantra can begin to beat you down.
If you are struggling with debt, you know in your head that you should not be spending as much as you are.
Hearing someone else tell you that is like telling someone to “calm down” when they're angry. It just doesn't work.
Spending Can Be Good For You
When people in debt spend money, it often gives them a brief reprieve from their stress filled life. Going out to a restaurant or buying new clothes when you don't have any money can help you ignore your debt-filled life, even if only for a moment.
Spending has the ability to increase our dopamine levels (that chemical in our brain that makes us feel good) which can make us more productive and increase our happiness.
With such a powerful influence over our lives, spending should not be completely stopped but strategically used to our advantage. If we allow ourselves to spend at specific times and on specific things, we will be much more successful in our debt payoff process.
The problem with our normal spending habits is just that – they are habits. Spending needs to be intentional and strategic to use it effectively to not only increase our happiness but also win our war against debt.
What Happens When We Stop Spending?
If you have a budget in place, I bet you have tried to stop spending on your wants and focused everything on your needs. It makes sense mathematically to put all of our money towards our debt and needs and halt all “want spending.” Unfortunately, few people are successful in quitting their spending habits “cold turkey” like this.
The usual path people take starts with motivation. They see a motivational video or read an inspirational post about how to get out of debt. They know they need a budget and need to stop their spending. It seems easy enough because look how many successful bloggers tell you about their success stories! If they can do it, so can I!
What many people don't tell you is that no one sticks to a budget perfectly. I have yet to meet a person who doesn't overspend every now and then. Those who try the hardest to stick to a budget often have the biggest setbacks.
If you try and stick to a budget that doesn't allow for spending, you undoubtedly have experienced the meltdown that comes a month or two into it. By sticking to your budget, your mind starts to convince you why it isn't going to work. you end up splurging on all types of “wants” as you become increasingly frustrated with not being able to spend or live.
Soon after these small setbacks begin to mount up, you throw in the towel and scrap the budget. Does this sound familiar? I'm writing from personal experience because I had trouble with a budget when I first started. This is the cycle I found myself in as I tried to stick to a strict budget. The budget process only made my spending worse.
Budgets Are Like Diets – You Need Cheat Days
If you need help starting a budget the right way, head over to my related article on budgets: It’s Time To Budget Like A Boss! However, if you already have a budget, make sure you have built in a “fun money” section. Fun money is money that you allow yourself to spend on whatever you want with no strings attached.
Spend Fun Money To Save Money
The way I have been able to stick to my budget in other areas is by giving myself an excuse to spend money each month. This fun money fund should fit within your budget and the size of it will vary depending on your debt and income levels. For you, perhaps you can only afford $20 dollars a month.
By giving yourself a fixed amount of money to waste, it will help train you to strategically spend it in order to get the most value from it. Your fun money should be in cash so you can actively see it leaving your person when you make a purchase. If your fun money account is $40 each month, take that out of the bank at the beginning of each month and put it in your wallet.
Having this money on you will give you a sense of control and freedom while teaching you to control your spending at the same time.
Spend Money In These Areas To Save Money
Fun money to me is extremely important so it takes the cake in order of this post. However, there are several other areas you need to spend money in order to save money in the long run.
This area has always been difficult for me because spending money on brakes and shocks does not directly give me any type of increased happiness. In fact, spending money on car repairs and oil changes makes me sad. I do not see any immediate benefit from paying for preventative vehicle maintenance so at times I will put off maintenance as long as I can.
Many of us have found out the hard way that putting off vehicle maintenance can have devastating financial impacts. If you don't spend money on new tires you could have a blow out on the freeway. This can lead to extensive body and undercarriage damage that is much more expensive to fix than new tires. That is of course if you don't suffer any personal injury from the experience.
Spend Money On Quality Food
In order to get out of debt, you need to be alive to actually stick to your budget. If you find yourself saving money by eating TV dinners and processed food, your health will ultimately suffer. If your health deteriorates, your medical costs will go up and your income may go down.
Buying healthy food comes with a price because natural foods are generally more expensive than processed food. Take care of your body now and your health and wealth will thank you later.
If you need a good meal planning service, check out eMeals. The company offers convenient food planning guidance that will not only give you recipes but can do your shopping online for you as well. They have a free trial available if you want to see if it can work for you.
Spend Money On Term Life Insurance
If anyone depends on your income or the services you provide, you absolutely need life insurance. Even if you are a stay at home mom or dad, if you were to suddenly pass, the childcare you provide is very expensive to outsource it. Life insurance can also be emotionally difficult to fund because people don't like to think about dying.
In addition to the morbid thought of dying, spending money on life insurance also does not offer any immediate value. You are spending money that you see no results from. This type of spending is like vehicle and home insurance. It protects you in the event of a tragedy but does not offer any type of tangible asset you can hold.
For more information on the type of life insurance you should purchase, refer to my related article: How To Pick The Right Life Insurance.
My name is Ryan and I run a personal finance blog over at Arrest Your Debt. I want to thank Peter for the opportunity to guest post on his site. He is a major influencer in the personal finance realm and to be part of his movement is humbling. By following his sound financial principles, you will be able to create a life of financial peace that both he and I live on a daily basis. Keep learning my friends, you work too hard to be this broke! – Ryan