The absolute golden rule of saving money is to stop spending it. The less you spend, the more you save – right? Surely there’s no other argument, no other way of viewing things? What if you were told that spending money can help you save it. Your world has been flipped on its head, and you instantly hop online to start a spending spree!
If only it were that simple! Things are more complicated than that, but you should start entertaining the idea that splashing the cash isn’t always bad. It is genuinely one of the better ways of saving money in the long term. Yes, this sounds absolutely crazy, but let’s think about it together.
Spending money on expensive items can often be a genius way of saving lots of cash in the future. It may not seem like you’re doing your finances a favor at the time, but future you will benefit from it. You see, expensive items are generally built out of quality materials. They are built to last, meaning they will be useful for many years. There are a few great examples of this that show you how it helps you save money.
For instance, think about buying a new watch. Watches can be expensive, particularly if you’re looking to shop luxury watch brands. However, you can also get very cheap watches, which usually mimic the luxury ones. When you buy a cheap watch, the chances are it won’t last a year. The strap will wear down, the battery will die, and it will probably have a few faults. By contrast, an expensive watch may cost two or three times more, but it lasts for ages. I’ve known people with fancy watches that they’ve had for decades! With the cheaper option, it seems like you’re saving money, but you end up spending far more on repairs and replacements over the years.
Cars are another really good example. People always look to save money by buying the cheapest car possible. You don’t have to spend a fortune, but spending a little extra on a better car can help you save loads of money. Again, the better quality of the product, the less chance it will deteriorate quickly and require repairs or replacing.
So, that’s one way that spending money helps you save money. The longevity of the slightly more expensive products stops you from constantly buying the same things over and over again. This doesn’t mean you should always buy the most expensive thing you see, but keep an eye on quality whenever you make a purchase.
Spending money on assets
Next, you can save money by spending your cash on some useful assets. Yes, investing your money is one of the best ways to save it and amass a small fortune. It’s highly recommended that everyone does it, though you should speak to a qualified financial adviser for any investment tips and information. You won’t get any of that here, but you will get an explanation on how it helps you save money.
People fall into the bad habit of passively saving money. You stop spending, follow a strict budget, but don’t do anything with the money you’ve saved. It just stays in your bank account or gets taken out and hidden under your bed. You might put it in a savings account, but even that isn’t going to do much. You’re doing all the right things by following a budget and avoiding reckless spending, but it’s the last step that’s missing.
Instead, you need to actively save money by spending it! Invest in different things and your money will grow over time. For example, let’s say you follow your budget and save $50 this week. Use some of that money and invest in something, then do the same thing again the next week, and so on. This means you’re constantly adding to your investments, so they grow in value. Over time, interest rates will also add value, meaning you can sit on a wad of cash in your retirement years.
Technically, investing your money is a form of spending. So, that’s further proof that you do have to spend to save – in some cases!
In summary, you shouldn’t always be afraid of spending money. The trick is learning when to spend your hard-earned cash. In general, if you need to buy something that’s supposed to last for a long time, it’s okay to spend a little extra. Get the more expensive variant, ensuring you don’t waste money on repairs or replacements for years. Similarly, when you save money through budgeting, put it to good use by investing it.