How To Think About Money Matters — Spend It Or Save It?
It depends on how we think.
We have been taught to save money our entire life. There are reasons for it. For one, it is important to have a contingency for rainy days. It is a bad idea when we have no cash in the bank to attend to a decaying tooth. It is also a bad idea when we cannot afford the necessities of life.
Keeping it short and simple, we need cash in the bank. Ample cash in the bank pays for necessities. Any excess can be invested to grow the pool.
That is the case for saving money.
At the same time, it is not the only way to think about money. Saving it is one of the ways to manage it. Spending it wisely is another way of managing money. How should we think about the 2 approaches?
We play defense when we save. We are like our mammalian cousins, the squirrels. They observe nature and can deduce that winter is approaching. Hence, they work to save their nuts away in their cozy abode.
It is to protect them from exposure to the cold, and it allows them to survive with the nuts bank just beside when heading out could be uncomfortable. They are protecting themselves and withdrawing to live and fight when spring comes along.
When we save money, we operate like that. We work with what we have.
And that is really it. It preserves today for tomorrow. It does not propel us forward.
When we save without spending, we are fall short in terms of investing in ourselves. Professional development requires funding. There is a limit to the free online courses and books. People who we want to learn do not work for free.
This is a fair game. Good things in life require funding. If we are thinking of taking a one-year sabbatical to travel around the World, we need to spend the bucks. It is funny how we are willing to dip into our reserves for vacation, and we flip to conservation when it comes to personal growth.
Every business owner understands the importance of Capital Expenditure. Entrepreneurs who work hard only to siphon profits away from the company at the end of the year is doing their company a great disservice. For any company to grow, profits need to be reinvested.
That means the executives in the company will need to decide to invest in hiring professionals in their field, subscribe to enterprise software for digitalizing work processes, acquiring new businesses to scale.
They got to spend to grow. Keeping the cash in the bank goes against the growth mandate.
When it comes to money matters — It pays dividends to think like entrepreneurs. Savings is important. Spending on our personal development is equally, if not more important.
When we get better at our craft, we command a premium in our compensation package. This is the formula for growing our income.
First, we got spend on ourselves. Then that better version of ourselves attracts companies to invest in us.
This is not easy to do. I struggle too.
I think about personal development all the time. I researched various ways to improve my communication skills, and I often come across in-person courses online, such as Dale Carnegie’s High Impact Presentations, which is the course made popular by Warren Buffett.
It costs $2,086.00. Staring at the digits alone feels as if an invisible knife stabbed my heart.
I paid for it anyway. I can see the value it brings to me in the future.
I cannot imagine being an executive without the ability to communicate effectively with the people around me.
From that perspective, my returns will exceed $2,086.00 in time to come. Absorbing the pain today is necessary for future prosperity.
So, I swiped my credit card instead of saving the money.
It has to be spent.
How We Think About Saving And Spending Matters.
Aldric
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