Money Management - Head Matters

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5.    Design a Plan

a. Describe the advantages and disadvantages of spending now rather than saving for a future goal


When we handle money, it’s sometimes easier to not care about the future and spend money as fast as we make it. We spend it on what we want right now. Going in that direction may mean that we won’t have enough money to live on.  We will be exposed to financial risk and decreased financial benefit. It’s easy to get into debt—one day of irrational purchasing can do it.  But that one day may make it much harder to accomplish our goals over the next weeks or even years.

The most important money management goal is to have enough money to live on. That may mean money in the bank for food, gas, college books, and tuition. It means having enough money to pay for rent or a mortgage, utility bills, insurance, and more. And, we all want to save enough money while we’re working so we can help finance higher education for our family and enjoy—rather than dread—retirement.

To have money to live on, you need to spend your money wisely so you don’t run out before the next paycheck. Living paycheck to paycheck is scary and stressful—running out of money on Tuesday and not getting more until Friday is no way to live. When you live this way, you can’t make plans for the future or even for today.

The fun part of having money is spending it to achieve your goals. Goals are measureable things that you can make happen. They are objectives that guide your financial plans and savings decisions. Goals can include getting a college degree, buying a car, taking a vacation, or buying a new coat. All of these goals require money, which means you need to work—and usually save—to achieve them.

Yes, there are some advantages of spending now—immediate gratification and catching a sale—but, mostly, it’s better to resist the urge to splurge.


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