How we spend our money dictates the financial wellbeing of our future. Would you agree with our 5 recommendations for better spending habits?

One of the key factors that influence our financial success is how we spend our money. While some purchases may seem necessary or desirable in the short term, they may not contribute to our long-term financial goals.

On the other hand, some purchases may have a positive impact on our financial health, either by increasing our income, enhancing our skills, or saving us money in the future. In this article we will discuss three types of purchases that can fast-track our finances and two types of purchases that we should avoid.

3 Fast-Track Purchases

#1. Investment in Education

One of the best ways to improve our financial situation is to invest in our education.

Education can provide us with valuable knowledge, skills, and credentials that can increase our employability, income, and career prospects.

According to a report by the World Bank, each year of schooling raises an individual’s earnings by 9%, on average. Moreover, education can also help us develop critical thinking, creativity, and problem-solving abilities that can help us adapt to the changing demands of the labor market.

Some examples of educational investments that can pay off in the long run are:

  • Pursuing a degree, diploma, or certificate in a high-demand field, such as engineering, health, or technology.
  • Taking online courses, workshops, or seminars to learn new skills or update existing ones.
  • Reading books, articles, or blogs that offer useful information or insights on various topics.
  • Joining professional networks, associations, or clubs that can provide mentoring, guidance, or opportunities.

#2. Technology for Skill Enhancement

Another way to fast-track our finances is to purchase technology that can enhance our skills and employability.

Technology can help us access information, communicate, collaborate, and create more efficiently and effectively. It can also help us showcase our work, build our portfolio, and reach a wider audience.

Technology can also enable us to work remotely, flexibly, and independently, which can increase our productivity, satisfaction, and income.

Some examples of technology purchases that can contribute to our financial growth are:

  • Buying a laptop, tablet, or smartphone that can support our work or learning needs.
  • Purchasing software, apps, or tools that can help us perform tasks, manage projects, or organize data.
  • Subscribing to online platforms, services, or resources that can offer training, coaching, or support.
  • Investing in equipment, devices, or accessories that can improve our work or learning environment, such as headphones, speakers, or cameras.

#3. Health and Wellness Investments

A third type of purchase that can fast track our finances is related to our health and wellness.

Health and wellness investments can help us prevent or treat illnesses, injuries, or disabilities that can affect our quality of life and ability to work. They can also help us maintain or improve our physical, mental, and emotional well-being, which can boost our energy, motivation, and performance.

Health and wellness investments can also save us money in the long term by reducing our medical expenses, insurance premiums, or absenteeism.

Some examples of health-focused purchases that have financial benefits are:

  • Buying healthy food, supplements, or products that can nourish our body and mind.
  • Purchasing fitness equipment, gadgets, or memberships that can help us exercise and stay fit.
  • Spending money on hobbies, activities, or experiences that can help us relax, recharge, or have fun.
  • Seeking professional help, advice, or therapy that can help us cope with stress, anxiety, or depression.

2 Purchases to Avoid

#1. Impulsive Luxury Purchases

One of the types of purchases that we should avoid is impulsive luxury spending.

Impulsive luxury spending refers to buying expensive or unnecessary items or services that do not add value to our lives or goals. Impulsive luxury spending can harm our financial health by reducing our savings, increasing our debt, or creating a habit of overspending. Impulsive luxury spending can also lower our happiness and satisfaction, as we may experience regret, guilt, or envy after making such purchases.

Some examples of purchases that may seem attractive but hinder our financial progress are:

  • Buying designer clothes, shoes, or accessories that we do not need or wear often.
  • Purchasing the latest gadgets, devices, or models that we do not use or enjoy much.
  • Spending money on lavish parties, vacations, or entertainment that we cannot afford or appreciate.
  • Buying gifts, favours, or donations that we do not genuinely want to give or receive.

#2. High-Interest Debt

Another type of purchase that we should avoid is taking on high-interest debt without careful consideration.

High-interest debt refers to borrowing money at a high cost, such as credit cards, payday loans, or personal loans. High-interest debt can have a negative impact on our financial health, as it can eat up our income, limit our cash flow, or damage our credit score. High-interest debt can also cause us stress, anxiety, or depression, as we may struggle to repay our obligations, face penalties, or lose our assets.

Some examples of debt-related purchases that can have long-term financial consequences are:

  • Using credit cards to pay for everyday expenses, such as groceries, utilities, or transportation.
  • Taking payday loans to cover unexpected emergencies, such as medical bills, car repairs, or home maintenance.
  • Applying for personal loans to finance discretionary spending, such as home improvement, education, or travel.
  • Borrowing money from friends, family, or lenders to fund risky investments, such as gambling, speculation, or scams.

Conclusion

Mindful purchases can make a significant difference in our financial success. By investing in education, technology, and health and wellness, we can fast-track our finances by increasing our income, enhancing our skills, or saving our money.

By avoiding impulsive luxury spending and high-interest debt, we can protect our finances by reducing our expenses, increasing our savings, or improving our credit. Therefore, we should always evaluate potential purchases based on their long-term financial impact and align them with our financial goals.

 

Would you like to know more about good spending habits? Let us know in the comments down below.