In a general sense, everyone knows how to use money, and what to spend it on. Even so, many people still find themselves with habits that are less than prosperous. And even those who seem to do everything right by typical standards may find they’re not as happy with the results as expected. So, we’ve compiled some tips about how to use money and spend money wisely to optimize your Prosperity journey.
We’ve found that while people’s “magic number” for wealth differs—some people want $1 million, some much more—the thing most everyone seems concerned with is Net Worth. Understanding wealth is knowing that Net Worth means very little in the grand scheme of things.
True wealth is about how much money you have flowing in and out, and how you use it. Someone could easily have a Net Worth of $1 million or more, yet have very little disposable income because they’re cash-poor. They might have incredibly high payments on their home, car, and other assets. On the flip side, someone with a significantly lower Net Worth may have a lot of flexibility from month to month because their payments are low and they have very little debt.
So, who would you say is better off?
We’ll reiterate: your Net Worth means very little if you don’t have freedom and flexibility. Understanding wealth happens when you understand cash flow.
Spend Money Wisely
If building wealth is about creating cash flow, then you want to learn how to spend money wisely. For most people, the typical order of operations is bills, food, fun, and savings. And by having savings at the bottom of the totem pole, it’s usually a very slim margin.
You can learn to spend money wisely by changing your order of operations. What if you saved money first? The Currence app allows you to do this. By redirecting your income into Currence, you’re creating a net that captures savings. You decide how much money flows from Currence to your checking account, and the rest stays in your Currence Reservoir.
This small, simple change allows you to operate on your desired income while eliminating the temptation that any additional funds may cause. This way, you can spend money wisely without having to adhere to a rigorous budget or limit yourself.
The Importance of Good Money Habits
Habits take about 66 days to form, according to James Clear, author of Atomic Habits. This is 66 days of repeated actions. And when you’re being intentional about habit-building, 66 days can seem excruciating. What if you forget? What if this is a really difficult habit for you to create?
On the flip side, how many times have we subconsciously created habits? The ones that really aren’t all that good for us? Sometimes, spending can be one of those habits. For example, you don’t want to get into the habit of putting everything on your credit card if you don’t intend to pay it back pretty quickly.
Habits help us support our lifestyle, for better or for worse. Of course, we all want to achieve “for better,” so it’s ideal to install good money habits. The kind of habits that help us save more money and create opportunities.
How to Create Even Better Money Habits
So, if creating money habits is so hard, how do you do it?
The answer is that you make the habit-creation as easy as possible. You probably already have two habits that you can piggyback off of. The first habit (we hope) is that you pay all your bills before anything else. The second habit is that you probably spend everything in your checking account. So, let’s make those habits work for you!
Using Existing Habits to Your Advantage
To use the first habit to your advantage, what if your savings showed up like a bill? That’s part of the beauty of whole life insurance. When you pay those premiums, you’re directly contributing to the growth of your cash value–it’s like a savings deposit. And if you’re in the habit of paying bills already, it’ll be easier to adopt a savings habit. As a bonus, you’ll get all the other awesome benefits of whole life insurance.
The second habit you probably have is to spend everything you make. This isn’t a moral judgment, it’s just a tendency we humans have. Spending money feels good. We also tend to think if we have the cash, we might as well make the purchase. As humans, we also tend to feel buyer’s remorse. To halt that, what if you simply had less money to spend?
This is how Currence actually helps you–it allows you to turn your unconscious spending into unconscious savings. You won’t even have to think about it, because it’s all automated. You just get whatever dollar amount you choose each month, to spend however you like, while Currence captures the excess. So now, you can spend everything in your checking account without the guilt.
So, with two simple accounts, you’ve created some major changes in your savings, without actually needing to adopt new habits. How incredible is that?
What to Spend Money On
The next piece of the wealth-building puzzle is what to spend money on. How do you spend money in a way that benefits you and your family?
For starters, we’re not against spending money. A big aspect of Prosperity and financial freedom is being able to do the things you want, when you want to do them. However, you also want to do them within your means. You’ve got to have an emergency/opportunity fund so that you’re protected AND in a position of capital for opportunities.
In other words, you’ve still got to put in the work and time to create a life where you’re financially free. This includes spending within your means, and not buying things you cannot afford.
Spend Money to Make Money
There’s some truth to the phrase “spend money to make money.” After all, investments take capital. However, you’ve got to ensure you’re spending money on the right things. You can’t just toss money around and expect to profit.
By saving money FIRST, you put yourself in a position to invest in cash-flowing opportunities. These can help you earn more money and create more monthly cash flow. More cash flow results in more savings (especially when you use Currence). More savings means more opportunities.
In other words, we like to say you’ve got to SAVE money to make money. Don’t skip this vital step in the process. You can’t spend what you don’t have, or you’ll never get ahead. By doing the hard work and carving out good money habits, you can start the cycle of saving and investing on the right foot.
So, what kinds of things can you spend money on? If you’re interested in learning how to use life insurance to get cash quickly, check out our recent blog.
Invest in Yourself
You are your greatest asset, after all. Every dollar you’ll ever make is because of you, so it’s a good idea to invest in your growth and development. That way, you can put your new skills to work and earn money in new ways.
Investing in yourself may look like taking online classes and earning new certifications. These can help you provide new services, secure a pay raise, and help new people. Going to networking events can be a way to invest in yourself. Even your gym membership or home gym equipment can be an investment in yourself—after all, good health supports your longevity AND helps you secure life insurance.
Spend Money on Your Business
In a similar vein, spending money on your business can help support your cash flow. Building and maintaining a professional website, having strong marketing, and developing new products or services can all be worthwhile investments.
Some business investments are risks, of course, so it’s important to do your due diligence before you spend.
Spend to Save
Sometimes, spending money can help you save money in the long run. For example, updating your windows, lightbulbs, and other home improvements can make your home far more energy efficient. This can save you some money on your energy bill, over time.
Installing solar panels can also help you save on your energy bill, and can even have some tax advantages.
Remember, though–only spend what you have. A reduction in your energy bill might not mean much if you have to go into massive debt. However, if it’s money you have to spend anyway, or you’ve been saving for it, choosing more efficient options is a good way to go.
The Best Use of Money
There are so many things that you can do when you have money. It’s difficult to say what to do with a large sum of money because you’re going to have different desires and objectives than the next person. Your best use of money could be wildly different than someone else’s.
At the end of the day, the best way you can use your dollars is in a way that supports the lifestyle you want to lead. This means you’ve got to consider your long-term vision for your money and make choices that support that. Installing good money habits can then keep you moving on the right path. It all takes work and patience.
We all want more reasons to spend money, yet savings should be one of your top priorities, regardless of your objectives. That way you’re in a position to make money moves. When the time comes to spend money, you’ll have it, and you’ll be able to use it in more advantageous ways.
To get started with a whole life insurance policy or with Currence, book with us today. We’d love to help you find the right solution for your personal economy and vision. And don’t hesitate to reach out to us with any questions. You can send them to firstname.lastname@example.org.