Live & Maintain: Part 2- Spending

Last week, I wrote about the importance of Saving but for those who haven't read it, click here to read it now.

Unlike Saving, Spending is the one 'S' out of the three that we probably know the best. It's hard to think of a time where we haven't spent money for longer than a 48 hour period. From the dawn of civilisation, people have spent in exchange for something else. From gold, cotton to even people being sold as slaves. It could be argued that as long as you can get the money for it, anything can be purchased.

Before this becomes a history lesson, let's fast forward to the present day. Consumerism has taken over society and we're spending more than ever before. Double-dip recession what? If we want something we all find ways of finding the money to spend on it, whether those means are legitimate or not is another topic entirely.

So what's wrong with spending?

Nothing. There are so many necessary products and services that provide basic, beneficial roles in our day to day lives that cost money to be produced so of course we need to spend money to obtain them. There are also hundreds of thousands of products that although not contributing directly to our quality of life, make it more enjoyable, productive & interesting.

There is however something very wrong with having to justify the money you just spent, especially if is justifying it to yourself... This usually occurs when Spending becomes 'Silly Spending'- when the desire of buying something overrides the logical reasoning for not purchasing it.

Silly Spending.

For my 21st Birthday last year I purchased something I had wanted for a few years prior but couldn't justify its purchase. I have this mental wish list called the 'one day I will have...' and it was right up there along with a Segway scooter & a date with Christina Millian, only this was much more realistic (and more necessary to me at the time).

So.... what was this luxury gift I had been hungry for? A new car maybe? A 3D TV perhaps to takeover my whole box room? Or even a very nice holiday away?... 

None of the above I'm afraid. What I wanted was so much more attractive to me at the time...

                                              

- I got myself a Gucci belt.

So the time had arrived. I was en route to West End to get my baby. For the half hour or so that I was in the Flagship store on Old Bond Street store I pretended I was the same as the other customers in the store. A luxury purchase was just chicken change to me and not something that would actually dent my pockets. Trying on jackets that I knew I couldn't afford and having the sales assistant point out matching shoes that I knew I couldn't buy was just part of me lying to myself & trying to condition my mind into believing this purchase wasn't a silly one. 

Having known which one I'd wanted for years, me trying on a few different options was pointless but as the saying goes "when in Rome, do as the Romans do".

As I parted ways with £200 of my hard-earned cash at the till, I felt a piece of me tear away. No this wasn't the money being plucked from my pocket, this was a bit of rational thinking breaking loose but I still proceeded and paid for my new belt. 

Immediately after I left the store I felt nothing. 

"Is this it?"

I asked myself. All those years of wanting it and now the feeling of owning a Gucci belt had left me feeling no better than when I had entered the store. If anything, I felt worse considering I was £200 down. I had planned to feel spicier than a 5'5 Blackanese babe in denim shorts, eating an extra spicy 1/4 chicken at Nando's. Instead, what I felt was lemon & herb at best. Of course I did what a lot of us would do in that situation. No not march back in the store and return it- I found a way of justification.

Justifying Spending. 

"You're only 21 once. You've earned a treat. It's a quality piece that will last you for years." 

These were the words I told myself. I even called my good friend for them to reinforce my reasoning. Having just purchased an even more expensive gift for them self, I thought they'd be the ideal person to reassure me that I hadn't lost the plot. This they did and did well. It was like I was seeking their approval for my spending and by them agreeing with the above reasons was like them signing off my expense and making it acceptable.

Now I know I am not the only one who does this. There are times when you've bought or are thinking about buying something and for some reason or not you can't entirely explain why you should get it. Nine times out of ten its because its too expensive or just isn't that necessary so we come up with ways to explain the thinking behind it. I have a good friend who says:

"If you couldn't afford to pay for it twice, you shouldn't buy it once." 

I think its a bit extreme & not entirely accurate but I see the logic behind it. Whatever the case, you shouldn't have to present an argument as to why you should buy something even if you're pitching that argument to yourself. If in doubt, leave it out which is why the same belt in question ended up on Ebay a few months later. Granted I lost about £50 on it, but at least I had recovered £150 to be more wisely spent.

Spending within your means/avoiding Silly Spending.

I'll stress again, there's nothing wrong with spending- as long as you can afford to.

Scenario 1: You're a student. You eat value bread and top it with 33% ham. Ribena or dilute squash is a luxury. Yet with all this being the case you 'need' a new outfit for the coach rave you had to borrow money to buy tickets for.

Is this life?

Scenario 2: You've just bought a nice new car and everyone loves it but of course it doesn't pay for itself. Realising that on the rare occasion you actually receive petrol money from your new found friends who  now always have "motives" for you, it will never be substantial. Having a car shouldn't become a trade-off between petrol money and having enough to buy food to eat. It could seem as if the car is driving you if you can't seriously provide the means to look after both it and yourself to a decent level.

You should never be unable to provide financial support for your loved ones just because you spent that money on a silly purchase:

Scenario 3: Your mum's in a bit of a tight spot and you'd love to help but you 'need' a new designer jacket. 

Last time I checked, you could get decent jackets without breaking the bank so that response would be pretty weak but I do understand, it happens. 

Notice how I put the word "need" in inverted commas? That's because too often we confuse needs with wants and start to believe that by spending on certain things we'll actually be able to satisfy a need. The problem with this though is that with every need satisfied, a new one replaces it- especially when these needs have been manufactured. Remember:

 "If you don't learn to appreciate what you currently have, you'll forever be lacking."

Spending vs Saving.

Having disposable income is a must. Its great to have money put aside so you can spend on whatever you feel like. If you've already worked out your outgoings and put some money away then by all means spend without having to clench you bum cheeks & hold your stomach at the till. Just ask yourself this:

"Would the money I'm spending on this be better off saved or invested elsewhere?"

Purchasing something that adds no value (sentimental, personal or economical) is just plain foolish. Yes ladies you can buy yourself new UGG boots, but how great will they look if you can't even afford to replace your ripped leggings or body lotion for those ashy knees?

Guys-being head to toe in Louis V may be cool but not when I see you in McDonald's using your student discount to get a free cheeseburger. If you can afford to look the best then you should be able to afford to eat the best too.

There's nothing bad about Living, just make sure you remember to Maintain also. 

'Stunting' is the third 'S' & the last instalment of the 'Live & Maintain' topic which will be focused on next week so stay blessed & keep posted.

Mr. Adz

Live & Maintain: Part 1- Saving

It would be a myth to think that I could explain how I feel its best to Live & Maintain all in one post. So therefore this is the first instalment of the 3 S' Trilogy- (Saving, Spending & Stunting). Saving- by far the most important yet most overlooked aspect of this topic.

Good financial management and young people seem to be as familiar with each other as an overweight person and a vegetable salad. The problem with this is that like it or not, money moves the world whilst a lack of it moves nothing.

Look at the financial crisis for instance- the mismanagement of money had global ramifications that have affected us in ways many of us are yet to understand. What seems even harder to grasp though is how much money we are literally squandering away each and every day. 

In my other post, Y.O.L.O. (apparently) I described an increasingly worrying epidemic- one of which I feel is directly responsible for how we view money currently. Too often we are living for the moment and not giving a rat's ass about the future. Life is for living, but a life with low financial security? I cant imagine that being a very pleasurable existence.

I remember my first job in JD Sports in West End *smiles reminiscently*. I was so excited about the prospect of not only working for the same company I'd spent hundreds of pounds with but more importantly having a regular source of income from them. To sweeten the deal (or make matters worse) I was getting paid weekly. So naturally, as any responsible, young 17 year old would have done at the time I set up a savings account and moved most of my income to my savings account each month.

                                                                     

                                                                               YEAH RIGHT !

I saved absolutely nada for like half of my time there. Being surrounded by the latest trainers & sportswear was a constant source of temptation that I couldn't resist, especially not when I would receive 25% off. I mean it's not like I was spending someone else's money? This wasn't money I'd robbed or inherited, this was my own money from my own hard work- what I did with it was my perogative... Or so I thought.

It wasn't until my mum walked into my room one day and saw her worst nightmare. No I am not referring to alcohol, drugs or even a weapon, I'm talking about boxes upon boxes of brand new trainers stacked on top of each other. She was fuming and didn't hesistate to verbally rip me apart about how I had handled my money.

No this wasn't an actual photo but you get the point! 

"Don't save what is left after spending, spend what is left after saving"- Warren Buffet

I wish my mum would have said this as eloquantly as Warren Buffet and avoided making me feel stupid but the overall message was the same. She pointed out that instead of me putting money aside for a rainy day, I had decided that today was more important. Having the latest footwear made me look good and feel even better so why not spend the money on myself after all, that's Self-Investment right? Wrong! (Click here for my blog post on this).

In these troubling times, prices are at an all time high and are only set to rise further. I remember the day when finding a £1 coin meant you could get a packet of crisps, chocolate bar, can drink and some sweets whereas now you'd be lucky to get any two of these without haggling with the shop keeper (which can be quite time-consuming and embarrassing).

In order to live just a decent life you need to have a small amount in savings so how do we get off expecting million pound lifestyles when our bank accounts are currently in overdraft? It just isn't happening I'm afraid.

Thinking ahead.

So recently me and Lacey went our separate ways. It was an emotional experience to see the girl you've become so attached to going off with some random bloke she just met but it had to be done... I had to sell my first car.

And bye bye to my J. Cole album I left inside the CD player 

It all came down to me being realistic with myself. Yes driving is a great convenience, but when that benefit becomes more expensive than helpful it's time to call it a day. MOT renewal, insurance renewal, parking fines, miscellaneous costs and not to mention the increase of petrol prices were all indicators that it would be a much wiser idea to sell my car, cut off all related expenses and save that money up. Going from an employed man on placement back to a broke ass student again next year won't be a smooth journey but I believe these type of decisions cushion the ride.

Setting money aside.

Each time I get paid, I aim to put around 70% of this into my savings where I will not be tempted to touch it. Although very painful, I'm motivated by the fact that I know it will only help me further on down the line. Also, it's good to see extra digits in your bank account instead of seeing minuses.

Try to agree with yourself a realistic amount that you can save each month and start that rainy day fund because you honestly never know what tomorrow holds. Having a healthy amount of savings is like always having at hand; an umbrella, wellies, sun shades, 3/4 shorts, wooly hat & a jacket for whatever type of weather tomorrow brings, rainy day or not- you'll be prepared.

Every little does help.

Similarly, have a piggy bank. I used to honestly hate brown coins and would do anything to get rid of them (even throwing them away at times) until I realised that if I stored all my lower value coins away, after a year or so I'd have a decent amount to do with what I please so this is another simple way we can all save. Every now and again why not throw a couple of silver coins in there too, in fact go on, throw in a £1 coin into the mix- you know you want to.

"Yeah man, I'm not even trying to spend right now, I'm saving up for a mortgage"

My actual face when this statement's said

This comment angers me inside whenever I hear it as it doesn't even make sense. This makes me wonder if they even know what they're on about. Whether they think it just sounds cool to say or whether it makes them believe that they're clued up.

A mortgage is a type of loan and you can't 'buy' loans. What you can do though is save up for a deposit that you will have to surrender to get a mortgage and this starts from £10K+ depending on the value of the property so no time better than the present.

Get your credit game up.

We've been taught that credit cards are bad, they cause debts blah, blah, blah. This is false. The cards themselves do nothing, rather it is how we use them that does everything else. One thing they're good for is boosting our credit rating which banks look at when deciding on whether or not to give us a loan. So do not think that just because you have a deposit it's in the bag- far from, your credit rating plays a big role. For those still cautious about credit cards, either read a great article on moneysavingexpert.com (click here)  or try other methods of credit boosting such as taking out mobile phone line rentals, paying back overdrafts on time and a few others.

It doesn't end there...

This is only 1 of 3 parts of the 'Live & Maintain: 3 S'. Trilogy. Our purchasing decisions and what we do with our purchases go hand in hand with how we save so be sure to check out the next posts on the second and third 'S'- Spending & Stunting.

- Mr. Adz -