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How to Spend Money Like a Boss

I’ve always been cheap.  5-dollar footlong from Subway? Yes please! Buying the cheapest (but largest) TV for the price? What a deal! Maybe it’s how I was raised. Maybe it’s my aversion to risk,  my inner need to always have a back-up plan, or my idealistic nature that leads to me to save my money for when I “need it someday”. But the longer I live being a “cheap” person, the more and more I realize that just blindly saving money and storing it up for “something big” someday is a stupid idea, and you’re going to kick yourself for doing so. Having money is interlinked with having a rich mind set.

Here’s why; when your default mode is to be cheap on everything, you’re constantly telling yourself that there’s nothing out there that brings you enough joy to justify paying for it.I can understand saving as a necessity, when you just “don’t have the money.”

But how many times does “not having the money” actually just mean “this would take a nicer chunk out of my bank account than I feel comfortable with”? Or maybe, “I don’t have the money” means that your imaginary budget is not ok with you spending a disproportional amount of your income on just one thing, as opposed to spreading it “evenly”. I don’t advocate for spending recklessly to prove that you are actually able to find joy in life. That’s childish and unnecessary.

So how should you spend your money? 

My favorite financial advice comes from Ramit Sethi, best-selling author, entrepreneur, and all-around champion. One of his main principles he teaches is to “Spend money extravagantly on the things that you love, and cut costs mercilessly on the things that you don’t.” In order to understand this a bit better, let’s break it down:

Spend money extravagantly on the things that you love

If you’re the type of person who does nothing but save and save and save, just like your parents told you to, then think about this for a second. What things in life give you the greatest joy? What people, places, and experiences do you go through in life where you look back and say damn, that was one of the best times of my lifeThose are the things that you should spend your money on. You will never regret it.

Maybe you’re cheap at everything in life, except for traveling. You absolutely love traveling, and trotting the globe brings you the most joy in life. Maybe you’re cheap at everything in life, except for your pets. You have a dog, cat, iguana, parakeet, and tarantula (eww) and you love nothing more than to spoil them. Some people may look at you and say wow, they spend HOW MUCH on THAT?! That’s outrageous. 

I for one, am absolutely guilty of thinking that of other people. Someday, I hope that I inspire that thought into someone’s head as I spend money on something that I absolutely love and am passionate about. Now, for the next part…

Cut costs mercilessly on the things that you don’t

If you already tend to be more of a “thrifty” spender, then this one won’t be a big problem for you.

If you don’t absolutely LOVE the idea of watching a movie with a bucket of 7 dollar popcorn, then don’t do it. If you don’t LOVE the idea of waiting in line at Finish Line and paying top dollar for the newest Jordans, don’t do it. If you don’t LOVE the idea of having the newest iPhone, then go for an older model.

Here are three things to remember about spending!

1. Not all spending is created equal

Each time you spend money, you are not just “spending money”, but making an investment. Any investment you make is going to have some kind of dividend. New material possessions may make you feel excited/good about your self for a short period of time. New experiences will give you a range of emotions and memories that will stay with you forever. New books, education, and courses will help you grow and develop skills and will help you increase your earning potential in the future.

It’s important to note that investing in yourself can fit into all three of these categories. Buying well-fitting, stylish clothes, though just a “material possession”, is a self-investment that shows other people that you love yourself enough to care about your appearance. Investing in new experiences will help you become more cultured and is an investment into your emotional health.

And of course, investing in your own education (formal or informal) is a choice that will likely help you to make more money in the future.

2. Money-spending biases

We all have some built-in biases regarding spending money that are hard to break. One of those is the tendency to want to not spend too much money “all at once”. When we make a bunch of big purchases at once, we are much less likely to want to make another big purchase, even if it is something that we know we’d really love.

When you’re buying a car, paying vet bills, and rent is due, you’ll be a lot less likely to make that weekend trip that you’ve been wanting to take for a long time. You’d take that same trip without even thinking during a week where you aren’t spending much money. Another bias is thinking that trying to save money is always “cheap.” Here is another outlook.

There’s a difference between “smart shopping” and “being cheap”. Smart-shopping is buying the same items for cheaper at places like Amazon, T.J. Maxx, DSW, or at used bookstores. Being “cheap” is catering your life and all your purchasing decisions around how you can spend the least amount of money.

3. And what about saving?

Ahh, saving. When it comes to saving, I’ve always been one of the best savers out there. Mom and Dad are certainly proud Money that is sitting in your mattress or in a savings account is a safe investment into your future. You never know what expenses life will seem to throw at you at any random time, so it’s nice to have a small cushion underneath you.

But if you simply save money without using anything to invest in yourself, you are not allowing yourself to achieve your full potential. By saving excessively, you are actually preventing yourself from growing in ways that you may not fully comprehend at the current moment.

If you want to save a decent chunk of money for more than a few years, investing in a mutual fund may be the way to go. I’m not going to claim to be an expert or give you investment advice (trust me, I’m not qualified) but I will share with you the simple power of compounding interest. The average return on the stock market is about 7% from the years 1950 to 2009. That means if you invest 100 dollars per month at 7% return for 10 years, by the end of that time, you will have made over 5000 dollars more than your original investment. That’s a solid chunk of a car payment, rent for (hopefully) a few months, or many nights on the town.


In the end, money is just a placeholder, and it’s damn difficult to get people to change their ideas on how to use it. You’re always going to make some investments that turn out to really suck, but it’s impossible to know if you don’t try.I hope this article gave you a couple new insights that you hadn’t thought of , so you can think of money not as the root of all evil, but something that can help you to live your best life. Here is another article that you will find useful on the topic of money. Happy investing :)


Photo credit: 401(K) 2012 via flickr









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