I’m often asked, “What does it take to be a successful manager of your money?” The answer to that is long and detailed, so I am going to try and boil it down over a series titled The Three Keys to Successful Stewardship. The keys are very simple and yet can be extremely difficult to put into practice. We are going to get into some detail about these keys with the aim of helping you become more successful in how you manage your finances.
The three keys are as follows:
- Spend less than you make
- Store up enough for the unexpected
- Share more than you think is possible
Let’s start by talking about the first key, spending less than you make. There are three questions for us to think about when considering how to spend less than we make. We’ll consider the first one today, and the next two in the coming weeks. The first question is : “How do I spend well?
This is an important question to ask because in many circles spending can be seen as something evil and unwise. In the materialistic West, where we are living in relative luxury and an abundance of blessing, it is easy to accuse anyone who spends money on anything of being self-centered and wasteful. This may sometimes be the case, but perhaps we should be more well-rounded in how we think of spending money. Spending money is not the problem, over-spending is.
The most obvious sign that you have entered the territory of over-spending is that you are spending more than you make. It’s very easy to see when this begins to happen. If you look at your bank account and see that there is more going in than is coming out, you’ve reached this point. Before you get there, however, you may get to the point that you are just spending more money than is helpful
There are ways to spend money that are actually counterproductive to our happiness and effectiveness in life. When we spend money, it is always because we think our lives or our families lives will be better because of whatever we are spending our money on. You pay your rent because your life is better with a place to sleep. You pay your utilities because your life is better with running water and working lights. You buy that new shirt because it makes your life better. Or does it? It might! Let’s get back to the question at hand : “How do we spend well?”
Here are a few observations for us to make as we seek to spend well. First, let’s recognize that we are all prone to over-spending against our better judgment. Once we admit and recognize that this is something we are all prone to, we can put good accountability measures in our lives to help us when we are tempted to overspend. Second, we need to realize that spending money on unnecessary items doesn’t always result in happiness. Having more things does not make you a happier person. Some of the happiest people I’ve known in my life lived very simple lives. Once we recognize these two truths, we are more equipped to know how to spend well and how to avoid spending as therapy or a search for a not-so-cheap thrill.
On the other side of the coin, spending well requires that we understand that the cheapest option does not always equal the best option. In reaction against spending money, it is possible to be so frugal that you don’t recognize the cost of getting a cheap product or a poor service. These losses are usually not felt up front, but later on down the road. Maybe you decided to go for the budget pair of shoes, and two months later find yourself in need of another pair. Spending more money on the front end often saves you money in the long run, but it’s money you’ll never know you saved. We call this an investment mindset as opposed to an expense mindset. In order to spend well, we must use wisdom to decide when a purchase should be viewed as an investment that will save money over it’s lifetime, or as an expense that won’t significantly help reduce cost in the future. Prices inflate for certain items just because of the feeling of safety and value that a name brand will bring. To spend well, each and every purchase must be made with this question: “Is this a worthwhile investment or an indulgently satisfying expense
The bottom line is that you still have to spend less than you make. It’s never a good investment to break this rule. Debt will begin to get the upper hand and that type of spending certainly won’t make you happy. Hopefully, this gives you encouragement to find ways to redeem spending and be confident in your investments. Spending money is a part of life and shouldn’t be viewed with fear, anxiety, or disgust. Next time we’ll answer the question, “How can I be sure that I am spending less than I make?”