11 Oct

Spending Purposefully

Any personal financial advice will tell you to cut out the daily Starbucks trips, spend less money on shoes, or to eat out a few less times each week. I disagree with that. Partially.

Ramit Sethi in his book “I Will Teach You To Be Rich” (yes, the title sounds spammy, but it is actually really good), talks about how you should spend money consciously. Rather than be frugal in all areas of your financial life, decide what is most important to you, spend on that, and cut back everything else.

I have a friend who spends very little money on his apartment, but a small fortune on his car. Another friend spends an ungodly amount of money at Starbucks. I even had an accounting professor in college who was very financially conservative (even though he was the CFO of a mid-sized company), but loved to spend money on shoes. All of these people have made a purposeful decision to spend their money on the things they care about.

To really make this work you have to cut out other things that you don’t enjoy as much which quickly bleed away your monthly budget. Personally I love to spend money on travel. So I spend less on cars, my house, and eating out than a lot of friends, all so that I can go on a big trip at least once per year.

But money is only half of the equation. You also need to spend your time purposefully. Just like your money disappears before you realize where it has gone, so does your time. Usually your time is spent in small chunks here and there that add up to an entire day wasted. Now I don’t mean that you should make your time more efficient so that you can work more hours and get more done. Instead you should decide what you value most, and do everything possible to spend more time on those things. Cut out the meaningless, but expensive, activities that suck up your time.

This may mean deciding what task you are going to complete before sitting down at the computer or cutting out the TV watching you normally do. Don’t let other people decide what you should be spending your time on, if a movie every night is your thing then do it. But then don’t complain when you run out of time for other things.

Whether on time or money, spend purposefully.

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