Spending money on the important stuff

Recently, one of our young staff members attended an Eminem concert; she described it as one of the best nights of her life. The cost of going to see Eminem for a young person is a lot! However, she had one of the best times of her life, so undoubtedly this was money well spent.

When considering a budget, people automatically think it’s about spending less. Forming a budget isn’t about spending less, it is about directing your income to the things that are most important to you. Attending a concert is far from an essential cost, but if you get a lot of enjoyment from it, then it is meaningful spending. At Future Financial Services, the essence of what we do in this area is to direct as much of your income as possible to meaningful spending and reducing spending that adds nothing to your life.

I’m not really a concert-going guy (much to my wife’s distress), and although I don’t mind Eminem, I’m far from a fan. If I spent half of my weekly earnings on a ticket to an Eminem concert, it is unlikely I’d get the same enjoyment as a true fan; for me, it would not be a great way to spend my money. My point is that, different things are important to different people. What is important to me, may be a waste of money for someone else.

Our ongoing lifestyle is the biggest contributor to our overall happiness. When we are developing a spending plan (we don’t call it a budget due to the negative feelings that word has with most people), we get out clients to outline what they deem as most important.

We ask our clients to nominate the 3-5 things they like to do each day, each week and each month. The theory being, if you are doing the things you deem most important each day, week and month; you are probably living a life that makes you happy. We allocate our income to these things first, (along with our non-discretionary spending to pay our bills and alike).

We then go further and nominate your medium and long-term goals and allocate some income to achieving these as well. Some of those goals are not about long-term financial gain, they are likely to be things like overseas holidays or purchasing something you’ve always wanted. This is using your income on meaningful spending and adding value to your life.

Developing a spending a plan and being aware of your spending habits, if done well, will improve your standard of living. A budget need not be a belt-tightening exercise. It should be viewed as focussing on spending as much of your discretionary money on things that are meaningful to you and less on things that aren’t.

You want to be directing your money to things that will see you coming to work on Monday, talking about one of the greatest nights of your life.