financial decisions

Financial: The Spend or Save riddle.

Americans usually don’t need to be prodded to spend. Over the last 30 years, Americans have maintained a spending rate far above other industrialized nations. In 2007, consumer spending peaked at slightly above 70 percent of the U.S. Gross Domestic Product (GDP), while it only amounted to 55 percent of the GDP in Germany and Japan [source: Brockman]. – DAVE ROOS

Spending is not much of a problem for some while saving comes naturally to others. The main issue we have is how to decide which decision is best for us at a moment in time. The “Spend or Save Riddle” is commonly a source of headache. It becomes difficult to find the satisfaction we expected from our financial decisions. A lot of us wait for lucky money all our lives, but when it finally happens we don’t know what to do with it. How do you handle those moments when you happen on some profit and there is extra cash in the till?

Are you a Spender or Saver?

“Investment” is the constant buzz words, eventually we all want to be proud owners of investment. The problem is usually that time before we know what to invest in.  Imagine you finally make some huge sales, or your boss doles out bonuses or your long lost Uncle sends in some cash. Do you spend it immediately on your prime activity, or do you hoard it in hopes that you will make a wise investment someday?

It’s easier to be an impulsive when deciding whether to spend of save. Both are driven dependent on each person’s propensity, spending habits  or fear. The fear of missing out on every new thing and availability of credit pushes the unprepared spender to go way above his credit and end up in debt. If you are in the habit of upgrading on particular brand products, spending at a whim may come easily to you.  While the fear of not being able to keep up with economic demands, nudges some of us to extreme hoarding.

Both extremes could be totally unproductive and limiting. They affect your capacity to take financially sound decisions. Hoarding funds with a motive to save makes you feel guilty even when spending on your needs.  It’s important to understand the difference between frivolous spending and necessary spending.

How to Achieve a Balance?

Here are some interesting suggestions. You can actually determine when to spend and when to save by following these simple rules:

  1. Spenders: wait 24 hours: Give yourself permission to spend, but with one condition: wait one full day to see if you still feel the same about that purchase. This eliminates illogical or impulsive spending. “After 24 hours your emotions will have changed. If you still want to make the purchase it will be a logical one, not an emotional one,” says Prof Gillon. Give your spending decision some time, start with 24 hours.
  1. Savers: find a financial role model: Is anxious saving stopping you from enjoying life? Find someone whose financial strategy you admire and see what you can copy. “You’re unlikely to relate to someone at the other end of the ‘saver or spender’ spectrum,” says Prof Gillon, “so just pick someone whose balance seems better than yours.”
  2. Spend to Save: Financial experts say, people without debt should look at the “save or spend” riddle from a different perspective. Instead of using their money to consume, they should use it to invest. When economists talk about investing in this sense, they’re not talking about stocks and bonds. Instead, they’re talking about products and services purchased today that will save you money down the line.The mantra is “spend to save,” and here are some examples:
  • Purchase energy efficient products that would consume less energy.
  • Spending on quality clothing so you don’t have to replace every few months.
  • Do preventive maintenance on your vehicles, especially before the summer and winter months when cars are most susceptible to breakdowns.
  • Buy a nice water filter for your faucet instead of purchasing bottled water.

Its ultimately important that we find a balance between spending or saving. With the right support and knowledge you can live a more fulfilled life and experience financial satisfaction.

Have you registered for the Monetize everything course? This designed life academy course is designed to improve your money management skills. Join here. 

8 Tips to Save Money on Groceries

The average family’s grocery bill is usually one of the higher numbers on the family budget. There can be an enormous difference in what each family spends on their groceries, depending on many factors, such as whether they buy organic, kosher, Gluten free, more meat, etc.

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The good news is that this allows for a large amount of savings if we decide to be frugal with our shopping. Following a few simple tips will have you well on your way to saving a few bucks.

1.) Make a meal plan. You’ll know exactly what you need from the store before you go.

2.) Watch for specials and coupons in store newsletters, and plan your meals around them.

3.) Make a list and stick to it. If it’s not on the list, don’t buy it.

4.) Don’t shop when you’re hungry. That way you won’t be tempted to buy things that you don’t need.

5.) Shop alone. Count on your bill being higher when you bring your spouse or children.

6.) Only buy things you know you’ll use. For example, if your family doesn’t like broccoli, don’t buy broccoli in the hopes that they’ll eat healthier this week.

7.) Keep your eyes on the items on the bottom shelf where the prices are lower.

8.) Buy store brands when the quality is the same. Most of the time, it actually is the same product in a different package.

It’s pretty easy to be frugal once you realize how much money you’re actually saving with these simple steps. Keep a log of your grocery bills, so you can see how much of a difference you are making.

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