How to Spend Money Intelligently

Most of us spend money without giving it a thought. We work 40 or more hours a week, up to 50 weeks a year, to earn our daily bread. And then, all too often, we throw it away foolishly. It is possible to spend your money with forethought and planning, and, most of all, live significantly better on the money you earn and derive greater satisfaction for the money you spend. Most of all, you don't have to pinch pennies and live like a miser.

Instructions

Difficulty: Moderate

Things You’ll Need:

• Spiral notebook

1. Treat money with respect and the spending of it wisely as important. Make it your friend and your servant, not your master.
2. Be frugal and watch your pennies grow. Be frugal. Use coupons to save money on groceries and other items, ask the price before you buy anything, and shop around for a better deal or haggle for a discount.
3. Plug money leaks. Stop "leaking" cash at every turn. If you make one unplanned visit to the ATM each week and take out just $10 more than you had planned, that will add up to $520 in 1 year. That's lost money that you probably could have used for a getaway weekend, to pay down some debt or another useful purpose.
4. Set up a "spending journal" to track how you use money. Record the purchase of every stick of gum, every time you fill up your tank with gas, pay the mortgage or rent, or even every time you drop by a fast-food joint.
5. Evaluate the value of what you spend each day based on the following 10-point, personal criteria. Highlight items that you rank 4 or lower. These are where you are wasting money and leaking cash on things that you neither need nor truly enjoy.
   
   
   10: An excellent buy. Would do it again.
   9: A well-priced necessity.
   8: An OK-priced necessity.
   7: Money very well spent. No regrets.
   6: It gave me personal satisfaction. No regrets.
   5 : I could have skipped it. Still, no regrets.
   4: An over-priced necessity. I should have shopped around.
   3: An impulse buy. Some regrets.
   2: An impulse buy. What was I thinking?
   1: A complete waste of my money.
6. Stop spending money on things of low value. You will find that you have perhaps $25 to $50 more each week for things you truly want.

Tips & Warnings

• If you dine out three times a week and spend, on average, $40 total, including drinks and tip, imagine how much you would save if you cut just one of those dinners out? On one hand, it comes to $2,080 a year. But realistically, even if you eat at home, you may spend $10. So, let's say you save $30 a week, or more than $1,500 a year ... and you still get to dine out twice a week!
• Let's say you buy coffee out each morning, 20 days a month, for $2.50. That comes to $50 a month, $600 a year. What if you buy beans and make your own coffee each morning? Your total cost may come to about $15 a month ... and that's if you buy super quality coffee. Decide what you will do with the $35 you are saving each month ... which will total $420 a year.
• Do this with all your money decisions, and you will have a better quality of life, live better on what you earn, and not even feel the pinch.