Frivolous Spending

Part of becoming financially independent is keeping more of your money in your own pocket.  It's actually easier than it seems. 

Now I realize that everyone has 'wants' (things that aren't necessary for survival).  But don't let those wants disrupt your financial plan.

As a teen facing the pressures of school and friends you probably have a list of items you want.  Like a new cell phone, the latest CD or movie and don't forget the brand name clothes, just to name a few things.  That's great.  Just because you want to become financially free (another way of saying 'wealthy'), doesn't mean you have to give up those frivolous items.  You do need to be smart about it though.

Plan Ahead

You know you are going to want the extra things so plan ahead for them.  You should already be saving a portion of your money for investing purposes - don't dip into that money!  Find the extra money from the money left over after you save your designated portiion.  Here is an example:

Lets say you make $200 per month at a part time job.  You have decided you will save 50% for investing in the future - so you put $100 into your savings account.  That leaves you with a $100.  Of that, you figure about 50%  ($50) will go to pay general expenses (time spent with friends, snacks, movies, etc.)  That leaves you with 50% ($50) for frivolous items.

Now your extra $50 is probably not going to buy you that item your looking at so you are going to have to save up for it.  Take your extra $50 and put it into another savings account.  Call this account your 'Frivolous' account.  Do this every month.  Put the money you have left over after you pay the general expenses into your frivolous savings account. 

Over time you will accumulate a sizeable amount of money that is designated for frivolous spending.  That way you won't be tempted to dip into your investment account and you won't feel like you are sacrificing anything by taking out of you general expenses money.

Shop Smart

By putting off your purchases until you have the cash in your account you are helping yourself in two ways.

First - You have the money.  You don't have to worry about borrowing it from someone else or skimming from your investment account and you still have your regular amount for general expenses.

Second - The cost of the item you want to purchase may actually be less than it was when it first came on the market.  Often when new products first hit the market they are priced high.  A couple months later, after the initial rush is over, the price will start to drop or the item may start coming on sale.

Another good reason to wait is that it will curb impulse buying.  When you have time to sit back and think about it you may decide that you don't really need that item.  Or you may decide that there is a similar item at a cheaper price that will do just as well.

Being financially independent doesn't mean you have to give up the things you really want.  It means you have to develope a different attitude when it comes to making purchases. 

A Whole New Attitude

Gone are the days of impulse buying.  Now you save money to make your larger purchases.  You wait until the initial rush is over before buying new products.  You shop around for the best price and look for sales.  You give yourself time to decide if you really want that item or if your are just following the fad.  Sounds like a smart shopper to me.

Some people may argue that if you are buying frivolous items then you are taking away money that could be used for investing.  They are right!  The more money you can put away to invest now - the faster your wealth will grow.  However, when you deny yourself the frivolous things, then saving money becomes more like a punishment and you are less likely to stick to it.

It is more important that you learn to control your frivolous spending by stopping the impulse shopping.  Give youself time to think about why you want that item.  Then wait until the price drops and if you still want the item then make your purchase.

Growing your wealth should not be a punishment.  At first it may seem like you are giving up all the extras and you may think you are suffering but give your plan a chance.  Once you get into the habit of saving for investing and saving for frivolous stuff your bank accounts will start to grow.  That is a good feeling.

As your savings start to increase you will notice the amount of interest you earn every month will start to increase as well.  That's a really good feeling. 

Stick to your plan and try to throw a bit extra into your investment savings account once in a while.  It won't take long for your wealth to start growing.