Learning How to Spend Money

Habits are hard to break. Good, bad, or indifferent; learning a new habit, or breaking an old one, takes time and a conscious effort. When you’re not a natural saver, learning how to save your money is a skill that has to be practiced. When you are a natural saver, learning how to spend money is the skill you desire.

It seems silly, doesn’t it? Everyone knows how to spend money! No. No, they do not. If you’re anything like me, and have the familial background that I do, learning how to spend money was a skill that had to be acquired. It was a habit that took time and still requires a conscious effort.

For those of you that are in the same boat, allow me to share the mental and analytical strategies that you can use to live your life to the best of your financial ability.

Some Background

Almost all your habits come from somewhere. You didn’t make them up. Someone handed them down to you. Your money habits are no different. Let me give you some of my background, in might sound familiar to you.

The year is currently 2022 and I just turned twenty-nine. If you do the math backwards, you’ll calculate that my grandparents were born directly into The Great Depression. My grandfather was a poor farm kid, raised with five other siblings, in an unmentionable town in Virginia. His family did not, could not, spend money. This is a habit he molded into my grandmother when she married him at the impressionable age of twenty.

He carried this lifestyle with him until the day he died, and he handed these habits down to my single mother, who then handed them down to me.

My grandparents saved, and they saved HARD. But for what? I was in my mid-twenties before I realized that nobody had ever told me exactly what they were saving for. They never vacationed more than three hundred miles from their home and their house has not seen an update since 1965.

As a result, my grandmother has enough money to live her days out doing whatever she pleases to do, but she won’t. Old habits die hard.

Does any of that sound familiar? I’m sure it does. We are never so far removed from a generation of poverty that we forget their habits.

But that’s enough about my family. Let me share the processes I used to break these old, familiar habits and learned how to spend money. Responsibly, of course.

Track your Spending

If you’ve read any of my other financially motivated posts, you’ve already heard me say it, but this is the hill I will die on. The first step to changing any of your financial habits is to track your spending.

Before I started tracking my spending, I always knew I had money left over, I just never knew specifically how much. In my head, it was never enough. The number in my bank account had to grow, no matter what.

Now that I track my spending, using the exact spreadsheet that I designed for all of you, I know exactly how much money is left at the end of the month.

By tracking your spending for yourself, either at the end of the month or along the way, you will know exactly how much wiggle room you have. This will allow you to see the numbers in front of you and know that, as a matter of fact, you do have the extra $20 to spend on that sweater or the extra $100 to pay for that Airbnb.

Knowing exactly what your income vs. outcome ratio is vital to learning how to save, but it is also vital for learning how to spend money.

Set Financial Goals

Another important strategy in learning how to spend money is to set goals. Determine exactly what you’re saving for. If you don’t set goals, you’re saving for a hypothetical moving goal post that you will never reach. You will quickly miss out on life along the way.

Some common things to save for can include an emergency fund, a new house, a new vehicle, or a vacation. Define how much you need for each of those things and then stop saving once you hit that goal.

Yes, you heard me correct. I, The Frugal Dreamer, just told you to stop saving.

Let’s say your goal for your emergency fund is ten thousand dollars. Once you hit ten thousand dollars, stop putting money towards that goal and start contributing to another one. Heck, buy those new headphones you’ve been after! In the event that your emergency fund takes a hit, then you start recontributing until you hit your goal again.

If you struggle with consciously being able to contribute to a goal, automation is your friend. Check with payroll to see if they will allow you to deduct a portion of your paycheck or speak with your financial institution to pull a certain amount each day/week/month to a separate account.

Having a goal, and then reaching it, can put your mind at ease that you are financially covered for whatever life throws at you.

Make your Money work FOR YOU

Anyone with ADHD has heard the term “object permanence”. If you don’t see it, it does not exist. This phenomenon is the reason I let my money sit in a regular checking and savings account for longer than I ever should have.

If I moved it to where I couldn’t see it, I had anxiety: anxiety about not having access to it, anxiety about losing it, anxiety about everything. I still do at times, but do you know what the antidote to financial anxiety is? Education.

There is a world of unlimited resources out there. Take the time to educate yourself on the things they never taught us in school. Figure out what the best strategy is for your money. I promise you that sitting in a regular savings account earning 0.04% interest each month isn’t it.

Some of my favorite educational resources are Girls that Invest, Money Honey Rachel, and Ian Builds Wealth. Learn what terms like Index Funds and Money Markets actually mean, instead of just regurgitating information from TikTok. A little education can go a long way.

Whether you are putting money towards a retirement account, a rainy-day fund, or an emergency fund, make sure your money is still working for you.

Breathe

It seems like such a simple thing but, remember to breathe.

You are only given one life and it is meant to be lived. Remember that you are the only person who gets to decide what that means for you, because it is different for all of us.

If you overspend on one night out or on one vacation, you will make it up. Conscious savers, like us, are good at that. There are unlimited ways to make more money or live a more frugal lifestyle. It is an overused cliche, but you can always make more money, you will never be able to make more time.

If you’ve set goals and have reached them or are actively working towards them, then you deserve to spend some of your hard-earned money on the things that make you happy.

Your emergency fund is there so you can afford to take the hit. Your vacation fund is built so you can afford to enjoy (or even take) that once in a lifetime vacation.

Remind yourself that you set it up so that you can take a financial hit without losing everything.

Learning how to save money is hard when you’re a natural spender. Learning how to spend money is hard when you’re a natural saver.

As with most areas of life, everything is reasonable in moderation.

By tracking your spending, setting goals, making your money work for you, and remembering to breathe, you can learn to feel better about spending money on the areas of your life that make you happy.

Happy spending everyone!