I’m not rich by any means, but one word of advice: “it’s not about how much you save; it’s about how much you keep.” I found this quote online a couple weeks ago. And it couldn’t be any further from the truth.
Say you’ve got more money coming in. You’ve earned a promotion at work. You’ve been hustling and you’ve got a few clients lined up for your side hustle. You have enough to finally start living extra comfortably. And it’s a great feeling, but with money comes responsibility.
When you start making more, you might be tempted to buy the entire world—just because you can.
It’ll be tempting, indeed, but just because you are “rich” doesn’t mean you have to buy things that make you feel “rich.” In fact, if you’ve landed a jackpot of paid opportunities, you should be spending like you’re broke. Here’s why.
1) The Wealthiest People Live Modestly
I used to listen to rap music faithfully, and there would be one overlying theme covering almost every rap song, and that is MONEY. Drugs and women too, but mainly money. Rappers nowadays definitely have a good amount of money on their fingers, feet, cars, homes, even teeth.
They’re definitely rich. But not all of them are wealthy. The real wealthy people, the one with real estate, stocks, and bonds, use their money to invest in themselves and their business.
Wealthy people know that materialistic items lack meaning, and the return of investment on such items aren’t very high. Financially-literate people dress modestly, live modestly, and/or drive modestly to cut unnecessary costs and place their money in places that will multiply their wealth.
2) Expensive Items are Expensive to Maintain
One of the reasons luxury cars are so luxurious is because the parts used to create them cost a fortune. So let’s say you buy a luxury sports car and one of those fancy parts break.
Ouch. That’s exactly what your wallet is going to be saying when you pull out unexpected chunks of money to pay for a simple oil change.
We’re not saying all luxury cars are a waste of money. Yes, they lose value immediately as they are pulled out of the dealership, but for several, luxury cars can be a saving grace. Some real-estate agents pull in far more leads when their prospective clients saw the hot rod they were driving. But not everyone will benefit from a luxury car the same way.
3) People Won’t ask You For Your Money
One of my favorite phrases that got me through my insecurities in school is, “if you’ve got it, flaunt it.” I was a smarty-pants and wasn’t afraid to admit it. I loved to dance so I showed off my skills at every party.
This phrase does NOT apply to MONEY.
If you start posting all your new adventures and all your new gadgets on social media, you’ll start learning that a lot of people you love need money. Buying expensive things and spending like your broke conveys to people that you’re not broke.
You can pay for your sister’s oil change. You can pay for your cousin’s dentist appointment. You can even help with paying off Uncle Rick’s college debt.
You didn’t even know you had an Uncle Rick.
Family is great, and sometimes they’ll need help. But other times, they might be taking advantage of a newfound source of money. Everyone loves spending money that’s not theirs. By spending as if you’re broke, even if you have money, no one will ask you to recklessly spend on their behalf. It would be like asking the homeless for money.
4) You Know Where Your Money is Going
When you’re broke or have ever been short on money for a period of time, you’re far more conscientious of where your money goes. However, when you start spending freely just because you have a comfortable amount, you tend to be just that: comfortable.
You don’t check out the price tags on clothes, you go out to eat a lot, and you’re not thinking every financial decision through.Some people think that they have so much money that they don’t need to budget. They buy whatever they want whenever they want. And eventually, they’ll end up right where they started: broke.
People that are broke try to spend as less as possible so that they don’t become poor. Those with lower incomes try to work multiple jobs, use coupons, and cut corners everywhere they can to save money.
If you are in a position to do these things because you can, not because you have to, take advantage of it! Start a side hustle and make sure you are getting the best deal on things you need to buy. Put all that extra money you make and save into an investment account.
If you are lucky enough to earn a decent income, make sure that money doesn’t leave quickly. Make your money work for you in the long run by spending like you’re broke: buy what you need, stick to a budget, and know exactly where your money is going. Then, use that extra money to invest in yourself and other assets. It’s not about how much you make. It’s about how much you keep.
Do you spend frugally even though you can afford not to? What do you do with extra money?
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I so agree with this! It’s all about being smart with your money and using it on things that are important to you, but also to make sure you have security.
I’m absolutely agree with entire post especially point number 3
My wife and I love looking for good deals online and in-store. We buy our clothes secondhand as much as possible and try to visit the grocery store midweek to shop the clearance deals that we can freeze or buy instead of the regular priced items.
Sometimes, we spend more than we should because we buy too many good deals (i.e. just yesterday I bought four bags of coffee on clearance that I didn’t really need but will use eventually). I think the key is to frugal shopping is finding good deals, but also finding products you will actually use and not hoard.
It’s better to live like a poor man and stay within your means, than spend more than what you can afford and end up as “all flash, no cash”.