The biggest reason why you have to spend money to make money is that there are no free lunches in this world. People expect you to pay to play. People need to put food on the table just as much and need to generate income to pay their bills and provide for their family.
In the past, there were many freebies businesses offered to customers. Whether it’s free air at the gas station or free samples at your favorite grocery store. Then, businesses stopped free. Whether due to inflation or a want to maximize profits, business charge money for everything now.
Especially when it comes to games. The micro-charges of $0.99 adds up when millions of customers pay the monthly amount. I personally pay $0.99/mo for cloud storage. Across millions of customers, that’s a significant amount of money.
It took me a while to learn but it absolutely is true that you have to spend money to make money. I personally thought I could make do just fine with an 8 years old MacBook Pro and a used iPhone. No. Quality purchases are better than quantity purchases.
These days, when I see a quality product that helps with my interests, I don’t hesitate for a second to dish out money for it. I buy new computers if the old one doesn’t function very well. Or new phones. If I see a dish that I think would help with my health, I also don’t mind spending $20 for it.
Spending money to make money can fast track your journey to building wealth.
You Have to Spend Money to Make Money: 9 Reasons
Below are the 9 reasons you have to spend money to make money. I started building my wealth much faster when I learned how to spend $1k to make an extra $10k.
1) There are No Free Lunches
People are economically motivated. Kindness is great but what’s even better is putting food on the table. Businesses and people provide a service so they can eat and provide for their families. There’s no one who provides a quality service who does it for free.
Free lunches only exist between families. Not between businesses and people. They have their own families to feed as well. You have to spend money to make money because quality comes at a cost. However, the great part is that quality is worth all the money in the world.
I personally have bad digestion issues. I estimate that I spent close to $5k to find out information on my digestion issues. The money was well worth it because when I function at my peak, I make way more than $5k. Spending money to make money fast tracks your wealth building.
Much faster than saving and hoarding cash your way to riches. We can’t bring money to our graves.
2) You Have to Spend Money to Make Money: Quality isn’t Cheap
Apple makes some of the best computers in the world. They are expensive for a reason. It’s not just brand value. It’s because their functionality of their computers provides more value than the cost. Which makes the purchase worth it. I also own a Dell computer.
The Dell was half the cost but 1/4th as efficient as a MacBook. That’s money and value down the drain, for me. Spending a little more money to gain a enormous return is worth it. In the first years of my personal finance and wealth building journey, I didn’t understand this.
I spent money on cheap food and home cooked meals. Yes, it taught me how to cook but I was losing much more than what I was gaining. Which was time. There wasn’t any point in saving $5 by spending an hour cooking when I could be making $100+ in that hour.
Quality comes at a price and it’s a price well worth paying. This is next level of the wealth building journey.
3) Stand Out from the Crowd
Many employees are worried about companies outsourcing their jobs away. However, the fear is more overblown than they think. Companies need workers in the United States if they want to compete in the United States. Why would I ever talk to a customer rep in India when a competitor is offering customer reps at home?
If the companies lower salaries in the US enough, their long term profits dwindle, as well.
You have to spend money to make money because this is how differentiation happens. Why would you go to an unavailable and unreachable business overseas when there’s a competitor right at home within arm’s reach? When you spend money to go to your customer, the customers are impressed.
It makes them feel important and special that you would go to this much effort to reach them. Too many businesses and people can’t get to the next level because they’re so afraid of the overhead. They feel safer earning $100k by spending $0 than earning $1mil by spending $100k.
Customers dish out good money to those who care about them. There’s no point in being a penny wise and a pound foolish.
4) You Get What You Pay For
Costco sells hotdogs and a drink for $1.50. They are delicious. However, it’s cheap for a reason. The quality of the meat is not right for people’s digestive systems. I always get an upset stomach every time I indulge in a Costco hotdog.
Yes, it’s cheap, but it’s so bad for you that you’re better off not having eaten the hot dog in the first place. You have to spend money to make money because it’s how you get ahead. I started this blog not by going the free version of blogging.
But by going the paid version right away. No one’s going to take me seriously if I have filledwithmoney.wordpress.com. It’s just not how it works. I took a risk and it’s paid off quite well. When employees aren’t paid well, they are not motivated.
When they are not motivated, they take it out on the customers. Then the customers stop going to the business. A lose-lose-lose situation for everyone.
5) High Competition
You can’t compete against the ones who already spend money on quality products. When competitors already show a willingness to spend money to take care of their customers, you can’t compete against them. I used to have the free version of Twitter.
However, Elon Musk started to heavily favor the ones with a blue checkmark for their algorithms. Therefore, I spent money on the monthly subscription. My competitors were all willing to pay for Twitter. Therefore, I had to be willing to as well, to be competitive.
Customers give business to businesses who are willing to spend money. Why would I go to a Wal-Mart when there’s Costco who is more nearby to where I live? Wal-mart is so understaffed, I always have a terrible experience when I visit the store.
Businesses compete and spend money for the customers’ money, attention, and time. You have to spend money to make money because your competitors are already doing so.
6) Investment is a Necessary Expense
Whether it’s in the product, people, or in infrastructure. No business ever made a profit by not investing money. There’s truly no business that was started with $0. You have to spend money to make money because investments are necessary to get ahead.
The products I love spending money on are technology. I spent money on a brand new MacBook Pro and immediately noticed the results. When I was working from my old laptop, I couldn’t write quality blog posts because there was a high lag between opening up my blog and writing.
It was running too slow and that split second would be enough to make me lose my train of thought. Instead of seeing spending money as an expense, it’s better to see it as an investment. You’re using money to make even more money.
Yes, the payoff isn’t guaranteed. However, nothing in life has a guaranteed profit, otherwise everyone would be doing it. You can be a part of the few who takes the risk and gets ahead.
7) Customers’ Expectations Increased
10 years ago, YouTubers could get away with content they filmed on their phone. The first video on YouTube has a whopping 250 million views and counting!! However, that’s not how it works anymore. These days, customers don’t want a video that was made on someone’s phone.
They want it from a high def camera that was professionally made by a quality cameraperson. You have to spend money to make money because customers expect much higher quality and the expectations will increase from now on.
Customers want to be dazzled. It’s how Las Vegas keeps the entertainment capital of the world title and customers keep coming back to the city. It may be more expensive for businesses to dish out the quality entertainment but it’s worth the cost when customers spend even more money in return.
Customers expect a better and cheaper product. It may cost more to produce but that’s what it takes to satisfy customers nowadays.
8) You Have to Spend Money to Make Money: Risk/Reward Payoff
Making $100k by spending $10k is better than making $10k by spending $0. The risk/reward payoff scale will always be there. There are content creators spending hundreds of thousands and sometimes millions of dollars to create high quality content for their viewers.
Then their ad rates go up then they can do even more videos to entertain the viewers. You have to spend money to make money because there’s always someone else who understands getting a return on investment. It’s not about investing in financial assets that matters.
It’s about investing in products that customers will care about and dish out even more money for. There’s always a risk but those who learned how to navigate that risk are well rewarded. Risk is a necessary component to every successful story out there.
You have to spend money to make money because the ones who take calculated and smart risk always comes out ahead.
9) Advertisement is Necessary
There’s no point in having the best product in the world if no one knows about the product. Advertisements are expensive but it’s necessary. The more customers who know about your story and who you are, the better the chances of a purchase.
Social media companies like Google, Twitter, and Facebook cater to their customers very well, which is their advertisers. The products they offer are the users who may dish out money to buy. Organic traffic and word of mouth advertisement is the best.
However, there comes a point when that becomes unsustainable. There’s only so much reach the social media companies will give to your content if you don’t pay. It’s nowhere near as preferential as the treatment they give to their paying customers.
You have to spend money to make money because customers have to know about your product, first and foremost, for it to matter.
You Have to Spend Money to Make Money: My Story
When I first started my building wealth and making money journey, I thought the exact opposite. I thought the best way to achieve upward mobility is to spend as little money as possible. Save and invest as much money as I possibly can.
That’s wrong. The biggest change in wealth happened for me when I understood that you have to spend money to make money. Customers just aren’t impressed with the low quality effort. Unfortunately, effort is measured in terms of how much money you spend.
Not in terms of the hours you put into perfecting the product. But in terms of how much money you spend to reach the customers in the first place. These days, when there are opportunities for me to spend money for a possibility to earn more money in return, I don’t hesitate.
My credit card bills are running higher than where I would like it to be. However, it’s a necessary cost. Not only did my quality of life get better because I’m spending more money on quality products, I make more money to improve my quality of life even more!
It’s not about financial assets that’ll make the difference in the end. It’s about spending money on quality products that’ll elevate you to further success. Financial assets’ returns are limited. The best assets yield an average return of 8% per year.
The return on investment on quality products is potentially infinity.
You Have to Spend Money to Make Money
There’s many in the personal finance space who say that saving money is the way to wealth. It absolutely can be. That’s how I got my start. However, after a while, the next level is to learn how to spend money to build even more wealth.
It accelerates the wealth building much faster. You have to spend money to make money because building a business requires an investment. Sweat equity is great and everything but every business required money to start. Uber raised an enormous amount of money to get their startup off the ground.
They were the first to market and are mountain times ahead of Lyft for a reason. They were willing to incur heavy losses in the short term to gain long term gains and gain dominance in the rideshare market. The early drivers were getting some great sign up bonuses!
You have to spend money to make money because your competitors are more than willing to do so. It’s a sort of creative destruction that scientist Joseph Schumpeter talked about heavily. Companies are innovating at a faster pace now more so than ever before for their customers.
You have to spend money to make money because competition becomes infinitely harder otherwise. This is one of the ways the rich get richer and the poor get poorer. We are competing in the knowledge economy in which the ones who best service their customers get paid.
There are much better returns you can get than a 8% annual return. All it takes is creativity.
You Have to Spend Money to Make Money: Reasons Why Shortlist
- There are no free lunches
- You have to spend oney to make money: Quality isn’t cheap
- Stand out from the crowd
- You get what you pay for
- High competition
- Investment is a necessary expense
- Customers’ expectations increased
- You have to spend money to make money: risk/reward payoff
- Advertisement is necessary
