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Many, if not all of us, dream of having a vast fortune one day.
We have this misconception of spending like the rich, where we have so much money that we can spend it on whatever we want. However, when we look at the experiences of those who are truly rich and come from money, they often tend to spend their money wisely instead of just buying whatever their heart desires.
This has even infiltrated mainstream media with the onslaughts talking about quiet luxury or how many actually spend more on investments like an investment management advisor Phoenix Az rather than big name brands or expensive dining places. So, does that mean that spending like the rich can be doable for those not part of that economic bracket? What are ways that we can learn to be smart with our money?
Money To Make More Money: Spending Like the Rich
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Avoid Lifestyle Creep
Many of us experience lifestyle creep, but we don’t notice it. When we say that a person experiences lifestyle creep, we mean a pattern of spending more money because you know you are earning more. This means that if, before, you would only pay a particular amount for things and all of a sudden you buy luxury items because you earn more. You end up spending more instead of using the extra money that you have as an investment or savings.
This is counterproductive because when you do this, you are just kidding yourself into believing you are more “rich.” Avoid lifestyle creep because what determines your wealth depends on your net income, which means how much you can save or what is left in your bank account. If you spend as much as you earn, you cannot make the necessary investments to improve your life or to allow yourself to make even more money. Because of this, we should learn from those with a lot of wealth. We should be spending like the rich, where even if we earn a lot, we only pay a portion of what we earn and use the other half or quarter for savings and, later on, investment.
Buy Long-lasting Things
Many of us think things are better and of higher quality if they are expensive. While this is sometimes true, we must understand that price does not mean durability or quality. Some big-name brands do not produce their products sustainably or make them last long so that their customers will keep coming back and buying more.
This means that instead of spending money on a cheap bag, you can opt to buy one that is slightly more expensive but you expect it to last longer. This concept of spending like the rich has become radicalized on social media, where people justify spending more for a product because it is marketed to last longer, meaning you are less likely to need to repurchase it.
However, as I mentioned earlier, it is also important for you to research the quality of what you are buying and what products are used to make that item. Buy things that are made of quality materials rather than just relying on a brand or a price point.
Create A Budget
When most of us think of spending like the rich, we assume that it means that you have no budget and can just spend whatever you want without worrying. However, when you look at how truly rich people spend money, they always have a budget. Of course, when you watch reality shows, their budget can be huge, like how some people spend half a million dollars monthly. While this is still a lot, they still have a budget, which means they ensure that they are not paying more than what they are earning and do not compromise the money that goes into investments.
Realistically, we cannot have a budget of half a million dollars. Based on where we live, how much things cost, and how much we earn, it is feasible for us to create a budget that suits us better, allocate enough money for investments, and help our money create more money in the long run.
One thing to remember when creating a budget is that it has to be realistic and appropriate for your lifestyle. For example, if you need to drink coffee every day, do not delude yourself into thinking that you will stop spending on coffee altogether just to save money and stick to a particular budget.
You could look for alternative ways to afford cheaper options or slowly stop drinking coffee. If we were to create a budget that does not reflect our daily coffee needs, we are less likely to stick to it and make a lot of unnecessary and unaccounted spending, which could be detrimental because we spend so much more than we initially planned or even more than we earn.
Final Thoughts
Overall, spending like the rich does not mean recklessly throwing your money at everything; it means being smart with your money and knowing how to save and invest properly. Would you like realistic tips for financial planning? Grab a copy of Financial Planning for the 99%: Financial Planning for Those Who Need It Most.
