7 Tips to Spending Money Wisely | Phil Town

hey guys I'm Phil town from rule number one investing here today I want to talk to you about a few ways to save and spend your money wisely [Music] for many people financial struggles are due to not bringing in enough money okay but for many others the problem comes from not wisely spending the money that they do make and arguably that might be everybody's problem in this video we'll take a look at seven ways that you can start better handling your money that you earn in order to help you reach your financial goals first let's track your finances before you can start figuring out how to spend your money more wisely you first need to understand where is it going that's always a mystery right make a budget and track both your income and your expenses and everybody says to do this but they're right you got to do it once you know where your money's going you can start looking for opportunities where it could be better spent so start tracking it where are you spending it second think about the long-term benefits and drawbacks of the purchases you are making far too many purchases are just impulse decisions to buy something that you don't need to impress somebody who doesn't like you anyway so while this is all great when it's $1.00 chocolate bar at the grocery store a little bit larger problem when you're out there buying cars they're trying to impress your neighbors before you buy something think about how it will affect you in the future how long is it really going to last is it really going to put you in debt that you don't need and is the value that you're going to get out of it over its lifetime is that really worth the cost and I'm gonna tell you right now your neighbors aren't impressed by your car alright and if they are they're boneheads so these are questions you've got to figure out the answers to and determine if something's really worth buying now the third only put money on credit cards that you can afford to pay off every month credit cards aren't inherently a hindrance to your finances after all they're just a convenient way to be able to pay for things and many cards offer some kind of cash back on purchases which is nice however you should only spend money on your credit card if you're able to pay it off in full at the end of the month if you pay off your credit card balance each month you won't incur any interest charges and it'll essentially be the same as paying cash if you don't pay off the balance each month though the interest of crude can spiral out of control now one way that people start to do this it's really effective Dave Ramsey's taught us all is to just put money in cash in envelopes for the budget items that you're gonna spend money on during the month and when that cash is gone then you're done spending money in that category so for example an envelope could be an envelope for restaurant spending might have $500 in it and when you've spent $500 in restaurants that month you're done going to restaurants so it might be a little easier to control your money that way than to just try to not do it on a credit card now fourth stop trying to impress other people that's crazy the average person spends far too much money merely maintaining an image fancy cars brand name clothing buy them in just the right store much of what we buy has more to do with just impressing other people than purchasing something we water and joy and I'm telling you man keeping up with the Joneses is an expensive and oppressive and unnecessary pursuit you got to buy things you enjoy and don't fall prey to the feeling that you have to spend money in order to impress other people I was working with a lady who so said she was a single mom two kids and she bought a new car just so she could drive her daughter to school in a car a daughter wasn't embarrassed by fifth figure out what habits are draining your budget after you start tracking your finances you can begin looking for habits that are draining your budget out these habits can include expensive hobbies eating in restaurants too much spending too much money on clothing or a lot of other financial drains that you don't need to incur and once you figure out which habits are eating up a large portion of your income then you can evaluate whether these are really necessary right and that's where again envelopes with cash can really get a grip on where that money is going sixth learn to value savings over products some people are naturally good at saving money and draw enjoyment from growing their wealth for others money something that is spent the moment it gets in their hands and anything else feels like a wasted opportunity if you're in the second camp I want you to try to adopt a mentality that value savings over products in the end money invested or money saved is almost always going to benefit your life more than money spent on products that will wear out or become uninteresting in time here's the thing you want to start focusing on what you can make on the money you're saving or you're never gonna save it and that's where learning how to invest starts to become so important if you can make fifteen or twenty percent a year saving money starts to become pretty interesting if you're only making 1% why not spend it on a refrigerator because you can't invest it anyway I gotta tell you when you're really good at this you do things like Warren Buffett he was writing up to his office in an elevator and some guys from an insurance company told this story on him there was a penny on the floor of the elevator and the guys looked down looking at Buffett looking at the penny and they're all sitting there wondering to themselves they talked about it later this Buffett gonna reach down and pick up the penny the richest guy in the world is he gonna pick up the penny and Buffett's looking at them and he looks at the penny and he gets to his floor and he steps out and he looks at those guys on the elevator and reaches down and reenter the elevator picks up the penny and says beginning of the next billion and walks away I mean you got a love Warren Buffett I'm sure he was just joking with him and messing around but I gotta tell you once you get on to holding on to your money and investing it with a high rate of return not spending it becomes a lot easier vii start investing now start investing as early as you can get your kids doing it early spending your money wisely isn't just about avoiding unnecessary purchases it's also requires you to take the money that you save and get it into things that'll help you reach your financial goals and that's what I was just talking about with that in mind there's no such thing as investing too early getting started too soon or investing too little even if you have nothing you can start picking great companies and making a great watchlist so it doesn't matter how young how old you are how little money you have to invest putting money into quality companies that will grow in value as time goes on is always a wise use of your income and even if you have nothing if all you built was that watchlist over the next year and then save save save you're gonna have money when this market crashes and you're gonna get enormous opportunities to put it into companies at great prices now I'd love to hear from you guys what's the hardest part about saving money for you and you know how do you handle it leave a comment below with your answer and I'll be sure to follow up with you and thanks for watching you guys now go play if you enjoyed this video and you feel it was valuable in teaching you more about spending your money wisely hit the like button and please share this video with your friends and if you want more investing content subscribe to my channel don't forget to click the button on the screen for a free gift it's awesome and thanks again for watching

Channel: Phil Town's Rule #1 Investing

Views: 370,102

Rating: 4.9203982 out of 5

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Id: x9oOWzDts5I

Length: 7min 30sec (450 seconds)

Published: Thu Jun 28 2018