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Smart money spending

Helen Njeri @PeopleDailyKE

The rich usually know something about money that most average people do not.  The beauty of having a conscious spending strategy is that it allows you to become intentional about the few areas of life you truly enjoy and want to develop, and you happily spend to enhance them. Here are some smart ways of spending your money.

1. USE MONEY ON CONVENIENCE

People relish being busy even if the time spent is not worthwhile. It makes you feel like you are getting a lot of work done when, in reality, we are getting way less done than we could.

Convenience means getting things done with less hustle therefore saving energy and time to do more. Use money to hire a personal chef. This will save you time to be with your loved ones, get more work done or being home but help children with school assignments.

Hiring a personal chauffeur means you will have more time to rest during the never- ending city traffic jam, make calls, have a moment to take a nap just before that important presentation and never have to worry about searching for empty parking spaces around town.

But just because you spend when it counts does not mean you do not save money, or that you get into debt. Spend smart! Ensure money you earn every month can automatically be put towards your bills, savings, and investments at a small fee. With this you avoid the long bank queues.

You can also avoid some purchases and instead go for those things that make your day-to-day more convenient, thereby saving money. Some examples: Travel apps, Uber/Lyft, pre-cooked meals, grocery delivery, personal trainers, housekeepers and a chauffeur.

By spending money on convenience you are able to get back hours in your day, time you would normally have spent on things that do not make you happy and which you can hire someone else to help you do. 

2. WEIGH THE OPTIONS

A lot of what happens with money comes down to choice. You can choose to buy a Porsche (assuming you have the cash for it), a less expensive car or just use public transportation.

You can choose to buy a pet, a cat, a pack of razors, or a kit of sky diving gear. Every time you choose something, you are eliminating others. If you buy a Porsche, you are probably not getting the Toyota (unless you get both).

If you have Sh800,000 and decide to buy a used car rather than investing the money, then you give up on the idea of investment (for now) and the money you could have made from that.

So before you make a decision about how to spend the money you have worked for, you are going to have to figure out what your best options are.

Here is a classic example: You call into a radio show and win two air tickets to Mombasa.

You bring your best friend, and while you are there, the guy in the row behind you asks (not so politely!), “How much did you pay for your tickets?”

You (very politely) reply, “They were free!” Wrong!. They were not free. Why? Well, look at it this way: What if you had turned around and sold those tickets for cash? You could have made a few thousand shillings from the deal then invested the proceeds in a special bond offer.

So when that guy asks you how much your tickets cost, the correct answer is “They cost a few thousand bucks.” You could have had Sh60,000, and instead you have zero. Those seats cost you Sh60,000, the value you gave up when you made the decision. That is opportunity cost.

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