Spending money is just as important, if not more important, than saving money.

Not knowing where and how to spend your money can cost you way more in the long run than what you could possibly save.

So what do I mean?

Every Dollar You Spend Should Be Viewed As An Investment

“Every dollar? Even going out to a restaurant?”

Yes.

“Even my Garmin Vivoactive watch?”
Yes.

“Even…toilet paper?”

Yes.

You see, every single thing you buy ever has some purpose for you in life. If you buy toilet paper, you can choose the cheap 1-ply that makes your ass bleed, or the more expensive 3-ply that coddles your ass even if you have hemorrhoids. In this case, you might spend less on toilet paper if the “return” of a better wiping experience isn’t worth the money for you. Conversely, you might find that a softer toilet paper is worth a return on your money because you have hemorrhoids.

Even things like Netflix, restaurant, and other purchases you use to pamper yourself could be seen as an investment in your own mental health. You can’t be expected to just go hard 24/7/365 without some way of relaxing. If you can spend some money on yourself (say, $50/mo in entertaining subscriptions) to recharge so you can come back the next day with even more earning power (say you go hard and you get a $10,000 raise the next year), I’d say that’s a good investment.

With all investments though, you have to do some due diligence.

Are You Actually Investing In Yourself, Or Just Splurging?

Is Netflix actually making you come back stronger the next day, or is it making you more lethargic?

Is going out to restaurants to impress clients actually resulting in more sales, and does their lifetime value more than pay for your fancy restaurants?

If you buy a portable AC to save money, how long would it actually take to get your money back?

For items that are more mathematical, you can easily run the math to see if the purchase is worth it.

For items that are more intangible, you’ll need to experiment and try it out to see if it’s actually getting the result you want. If “yes,” keep them. If “no,” cut your losses and try something else – maybe a Netflix doesn’t make you come back stronger the next day, but a relaxing glass of wine or a gym membership would.

And another thing with these investments is that you’ll need to realize the opportunity cost. If you spend $30,000 on fancy bags this year, that’s $30,000 less you can spend on fancy dinners. And that’s $30,000 less you can spend on a 10% annualized return investment.

I can’t decide for you if $30,000 in fancy bags will make you happier than $30,000 in fancy dinners. I also can’t decide for you if getting a $30,000 profit over the next 7.2 years is worth the happiness you’ll derive in splurging $30,000 in fancy dinners this year. Only you can answer these spending vs. saving tradeoffs for yourself.

Spending And Saving Strategically

We’re not here to be cheap just for the sake of being cheap. Life is much more than just accumulating a massive amount of wealth. Life is also meant to be lived to the fullest, and money is only a tool to assist in living a fulfilled life.

So I don’t want you to save money for the endgoal of having more money.

I want you to save money so you can use that extra money to do what you want and love to do!

If you worked hard and saved an extra $5000 this year, what’s the point of keeping it forever and not using it? If you saved $5000 this year by not being fancy and by ignoring the pressure to impress other people, feel free to spend some of it on that vacation you’ve always wanted.

In other words: be frugal strategically. Go ahead and rob Peter to pay Paul if Peter isn’t something you really want to purchase anyway.

And even though a lot of things in life don’t directly yield a monetary return, there are just some intangible things that are worth paying for. There may be some things you can buy that’ll lead to a feeling of security. And you might just want to blast the AC in the summer so you don’t suffer for 3 months and don’t risk a heat stroke.

Minimize Lifelong Regrets

At the beginning of this post I claimed that spending money wrongly can cost you way more money than you could be saving. If you worked hard to save $2000 over the year only to buy a $2000 bag, you’ve not only lost what you saved up but also the opportunity cost: $2000 invested over 10 years would be worth $5187 (at a 10% growth rate) – other words, you “lost” $3000 more than you saved (over 10 years).

Likewise, you can spend $4000 on something you don’t want to impress people you don’t like, instead of spending that same $4000 on an unforgettable vacation you’ve always wanted. In this case you lost something much more valuable than your saved $4000: you lost an unforgettable life experience. The $4000 you can always make back, but the best vacation you’ve always wanted but never happened? That’s the kind of shit you’ll regret deeply on your deathbed and you almost can’t put a value on these “could have been” memories.

So while this blog obsesses about saving money and not buying stupidly expensive coffee, we’re not here to be cheap just for the sake of being cheap. We’re cheap strategically. We’re cheap as not to be wasteful.

Be cheap as not to spend money on stuff you’ll regret 5 years (or 5 months) down the line.

Be cheap, so you have the money to spend on stuff that’ll make you happy even to the grave.

P.S.: This is a new blog and if you’ve found this helpful at all, it would mean the world to me if you were to share this post to someone that you think this post might benefit. It would also be immensely helpful to me if you could give me any feedback on the content at hello@goodmoneygoodlife.com