Money: everyone has to spend it, and all but one-percent of us have to spend it carefully. For those of us who are not independently wealthy, choosing how we spend our money is an ongoing necessary task that ensures our financial survival. Everyday, we are forced to consult our budgets before purchasing a coffee, a night on the town or electronics. Every year, we reevaluate our financial situations to forecast our spending and plan major purchases, such as vehicles, houses and vacations. This means that those who plan for their purchases are financially prosperous while those who have no plan for their purchases are financially troubled. But what exactly does good spending verses bad spending look like?
Intelligent spending is its own science. It may be a complex science or a basic science, but simply having respect for it as a science sets the good spenders apart from the bad spenders. Everyone’s individual science of spending looks different depending on factors such as income, cost of living, tax bracket, benefits and other financial variables. But everyone’s budget is also fluid, meaning there is an element of choice involved, and those who choose wisely come out on top. When spending decisions are made considering long term and short term financial goals, and when the spender uses restraint and respect for saving money, they are spending wisely.
Bad spending, on the other hand, is usually marked by a capricious attitude toward money. Interestingly, psychological factors are some of the strongest influences toward bad spending. Sometimes people are raised without an appreciation of where money comes from and they enter adulthood with bad spending habits. Or perhaps their parents simply never taught them how to budget, so the concept of money planning is foreign and unfamiliar. This type of spender either does not know how to allocate money properly or does not even try, and ends up in financial crisis’ repeatedly. This type of spending should be avoided as it usually proves to be a burden on the bad spender’s friends and family, who are left bailing the individual out at their own expense.