One of the best healthy spending habits is to focus on quality and not on quantity of purchases. One quality purchase is worth more than 10 mediocre purchases. The best way to get richer is by spending money rather than saving money.
The day I figured out how to spend $1k to make $10k is when my life changed forever. I was always under the impression that savings are the way to wealth. That saving as much money as you possibly can and investing the difference will bring you riches!
No, that is far from right. Although saving money did get me to a healthy nest egg of $500k at 28, once I figured out how to spend money is when the value accelerated even higher. Things like my brand new phone, laptop, and the like give me tremendous power to make more money.
That’s when I actually started making more money. Once I found out how to deploy the healthy spending habits to make more money is when doors started opening faster. Business investment expenses are well worth the cost. Spending $10k to make $100k is better than spending nothing to make $50k.
The frugality disease is a dangerous disease that’ll keep you stuck at the lower levels. To get to the higher levels, it’s figuring out better ways to invest your money that’ll get you more returns than the usual 8% per year. Investments into financial instruments is one thing.
Investments into your unlimited earning potential is another.
Healthy Spending Habits: 9 Ways to Build Wealth
Below are the 9 healthy spending habits to keep in mind. Too many focus on the savings part of the equation and not on the spending part. The mindset change to spending money to make money will do wonders for your net worth.
1) Focus on Quality and not Quantity
One of the best healthy spending habits is to focus on buying a quality product once instead of a mediocre product multiple times. I was a victim of this when I bought a used iPhone 10 for dirt cheap, $250 all-in. Imagine my surprise when the phone broke down just one year later.
Just in time for me to not be able to take advantage of the limited warranty that Apple offers. After that, I vowed to never buy used technology ever again. And I haven’t bought used technology since that traumatic experience.
Quality products are worth the price and cheap products are worth exactly that: cheap. I generally didn’t know what the fuss was all about because I was so used to buying used all the time. Furniture, cars, and the like. And everything turned out fine.
Then that one experience taught me a lesson I would never forget. There’s even a cost to cheap debt.
2) Healthy Spending Habits: Long Term Consequences
There’s no point in buying fast food just because it’s cheaper in price. I paid the price for it because I didn’t realize I had awful digestion issues. It wasn’t caused by the fast food but it sure didn’t help my stomach issues. My stomach should only digest healthy foods.
Not greasy and fatty foods. The long term consequences of me buying fast food is an increase in medical costs and hospital bills. Healthy spending habits include looking at the long term consequences instead of looking at the short term price.
There’s no point in buying a $5k car that’s been in an accident if you have to repair the car just a year later. Dealerships are notorious for selling lemon cars. In the test drive today, the car may work just fine. But after a year of driving, the car suddenly breaks down.
Long term consequences of your decision is what matters, not just the price to pay today.
3) Improving Your Quality of Life
This does not mean materialistically. Healthy spending habits mean spending money that improves your quality of life. I personally only buy healthy foods, for both grocery and restaurant purchases. If something costs $2 more because it’s gluten free, I don’t hesitate to buy it.
It helps me digest better and gives me better ability to think throughout the day. I used to only spend $5 per day on food by getting pizza, splitting half, and having the rest for the next day. No more. I don’t do that anymore because it costs me more than what I gain.
What gave me the ability to make $200k+ in my 20s is not because I outwork others. It’s because of my thinking skills and the ability to solve problems that people pay me so much at a young age. I cannot make good decisions nor think clearly if I do not eat well.
When a product improves your quality of life in unquantifiable terms, then it’s well worth it. We can’t be a penny wise and pound foolish.
4) Health
Gym memberships, food, and meditation sessions are all worth the cost. Healthy spending habits means dishing out good money to keep up good health. I personally do not spend any money on gym memberships because I go to the company gym after work.
If there was no company gym, I would pay good money for a gym membership without thinking twice. 2023 is when I started taking care of my health to overdrive and started many diets that my body agrees with. Vegan, vegetarian, pescatarian, and the like.
It doesn’t matter if you move one step backwards in the wealth building journey. Spending money on health will ALWAYS be worth the cost. That doesn’t mean always spend money on health. Some doctors recommend unnecessary procedures to earn a quick buck.
But it does mean spending $5 on health if it’ll make your body feel better than before you spent the extra $5.
5) Will the Spending Pay You Back?
Even spending $1k to make $1k is worth it. Life isn’t always about the best financial ROI but when it comes to building wealth and increasing net worth, thinking through a business mindset doesn’t hurt. Healthy spending habits mean looking at the payback time and ratio.
I personally spent $1k on my laptop during Black Friday. I expect the laptop to give me an additional $1k in revenues throughout the year afterwards. The additional money I earn in subsequent years is just a bonus on top. I also use the laptop for personal reasons anyway, too.
If the spending has a chance at breaking even, it’s a good purchase. Spending $15k on a car that’ll drive you to work to earn additional income is worth it. That’s a great return and a payback. Not every spending is an expense that’ll earn you zero returns.
Some expenses are well worth the cost because it brings you more money than it costs. Which is always the wise decision.
6) Improving Quality Relationships
Relationships are everything. Having quality friends who’ll have your back during tough situations mean more than any amount of dollars in the bank. Fostering quality relationships by grabbing that lunch or getting that drink means a lot in the long run.
My past coworkers referred me for $180k+ jobs because I built that foundation with them. In the past, I would shun any relationship building activity. “They were a waste of time”. “What’s a lunch going to do? It’s going to take time away from my work.” was my mindset.
Not to mention the last minute schedule changes that can easily happen. These days, even if a relationship is inconvenient to build, I don’t hesitate. I just say yes. You just never know where that $10 conversation leads to down the road.
The ones who get ahead have the quality network of people who’ll get them ahead. It’s invaluable.
7) Is it Within Your Budget?
Healthy spending habits means never going over your budget. Your budget is sacred in the personal finance world. It’s very telling on what your limits are so that you know what you are 100% free to spend money on. When I forgot my budget is when everything went awry.
In 2022, I wanted to spend as much money as I possibly could. No expense was too large for me. My income increased 30%+, for heaven’s sake! However, the bear market crashed my reality. It humbled me and I lost six figures+ amount of money. It was a record.
2023 is when I got back to my roots again. I don’t let my confidence get in the way of success. If something good happens, then so be it. I don’t let it go to my head anymore. There’s too much more things I need to accomplish to let myself be distracted with such things.
A budget is one of the best things for your life. I got into trouble when I forgot about my budget.
8) Healthy Spending Habits: Does it Require Debt?
Many people take on debt without giving it a minute’s thought. It’s one of the reasons why credit card debt reached record highs as of February 2023. No matter how bad inflation gets and no matter how expensive everything else gets, credit card debt is one of the worst debts to get into.
Healthy spending habits mean that it shouldn’t require debt to make the purchase. No matter what. I personally would rather skip a meal than buy a meal on a credit card. I personally don’t have to do that just yet but that’s how seriously I view taking on debt.
In 2022, I took on $50k of low interest rate debt and it was the worst experience of my life. Debt ruined my life and had the potential to decimate my finances. And for what? Just to make the banks richer than they already are?
Debt is expensive. It’s not even about the interest rate payments. It’s about having that on your balance sheet which requires you to think about it as you progress through the personal finance journey.
9) Entertainment and Fun Budgets
Entertainment is not a necessity but after a while, it’s a necessity. In the beginning phases of the wealth building journey, there isn’t a lot of leeway for entertainment and fun. In the later phases of the wealth building journey, you could have too much money than what to do with.
Healthy spending habits mean spending money on entertainment and on a fun budget. It doesn’t have to be extravagant. A simple $500/mo entertainment budget does wonders down the road. I personally make full use of my entertainment budget.
I can’t just spend my bare bones budget every single year. There has to be breaks, otherwise I have a high chance of giving up. Years 3 – 4 of my wealth building journey was the hardest. That was when I needed to entertain myself from time to time and take breaks.
Out of town trips became the norm. And that was money that was very well spent.
Healthy Spending Habits: Hoarding Cash is Not the Answer
Too many people think saving and investing as much money as you can is the way to freedom. It definitely can be in the beginning. However, that’s not where the best ROI is. The best ROI comes from spending money. There’s not a single big company who haven’t spent big money to get there.
It’s a bigger risk than hoarding and saving as much cash as you possibly can. However, it’s the best chances of getting to the top. Getting to the all time greats. It’s not about investing $10k to get an extra $800 per year. It’s about spending $10k to make an additional $100k.
That level of ROI is very hard to find in financial assets but easier to find in the form of education, content creation, and the like. Customers love to see sellers and businesses who put in effort to sell to them. It makes them feel like they’re important enough to dish out money for the company’s products.
Quality products are worth their weight in gold. You definitely get what you pay for. After getting what I pay for numerous times, I know exactly how to better allocate my resources. There’s nothing wrong with trying to get the exact same product just at a cheaper price.
There’s everything wrong with trying to find alternatives that could put you in the worse spot than before. Buying a reliable car once is better than buying used and have the car break down in just a year. Cash should be used to build wealth even faster.
That’s what the healthy spending habits is all about.
Healthy Spending Habits is Not About Materialism
Materialism is the enemy. Excessive consumerism poisoned many people’s wallets and minds into thinking that is the “good life”. That is not the good life. The wealthy life with a lot of money is the good life. Healthy spending habits is not about spending the most amount of money.
Even if one could afford to do so. It’s about spending money on products that give the most amount of value. Value isn’t always in monetary terms. Too many talk about the benefits of saving money but never about the benefits of spending money.
It took me 7 years to learn this important lesson. Once I learned, I ended up having more money in my pocket because I spend on quality and not quantity. Because I don’t have to spend as much money on healthcare bills. Materialism will always be the enemy.
There’s a time to save money and there’s a time to spend money. Healthy spending habits are also not about spending as much money as you possibly can. People’s quality of life can be great even after not spending a lot of money.
I personally only spend $2k per month. However, I gladly get out the wallet and use my credit card if I see a quality product that’ll improve my life. Healthy spending habits is a necessary component of life because making smart purchases is how we get ahead.
That’s when the biggest increase to wealth happens.
Healthy Spending Habits: 9 Ways Shortlist
- Focus on quality and not quantity
- Healthy spending habits: long term consequences
- Improving your quality of life
- Health
- Will the spending pay you back?
- Improving quality relationships
- Is it within your budget?
- Healthy spending habits: does it require debt?
- Entertainment and fun budgets
