How Spending Your Money Will Save It

According to the traditional Chinese calendar, 2020 was the year of the Rat. But if years could have financial themes, savings would have been the most prominent for the past year.

No matter your financial position and status, the world saw the importance of saving during the pandemic.

                                                                                 Source: MintLife Blog

Studies have shown that the global consumer class shrunk by 120 million people. Many lost their jobs and had to dip into their savings and emergency funds. Others moved back in with family and tried to reduce expenditure, revamping their budgets and investment strategies.

A lot of people equate having savings to having a frugal lifestyle and not spending at all. Very few realize that sometimes spending itself can be the solution.

“But isn’t that counterintuitive?”  you may ask.

In the long run, sometimes spending more than usual can benefit your savings strategy overall. It’s about planning when and where to spend your money versus when to draw your purse strings shut.

Spending Strategies to Save Your Finances

Believe it or not, spending money upfront can be a great way to save your hard-earned cash. Here are some strategies to build your savings in the long-run through smart expenditure.

1. Go for Better Quality

Cheaper, more affordable options are always tempting, especially when you’re shopping for items on the higher end of the spectrum.

You may be tempted to save a little by choosing a slightly less expensive, less quality couch than the premium one in the store. But by doing so, you end up compromising on the lifetime value of the item.

For example, say you purchase a mattress that costs $500 but will last ten years. That comes to $50/year. On the other hand, the cheaper option is tempting you with a $300 purchase for five years. But when you do the math, you realize that comes up to $60/year.

Like this example, several items may seem expensive upfront but can provide long-term benefits, both in usability and financially. Do your research on competing brands, their prices, and the advantages one has over the other before making an informed decision.

Examples of purchases where you should consider quality over price include:

• Sofas: You want to choose a good sofa that will last through the years and avoid the hassle of repeated visits (and purchases) at IKEA. If you’re already settled in a house and won’t be moving around, it might be a good idea to purchase a sofa on the higher end of the spectrum (think: $1,500-$2,000). Quality sofas last much longer than the sub-standard ones.
• Clothing: Depending on your nature of work, you may be inclined to purchase formal wear and suiting up for your clients. Don’t skimp out here. A good suit is an investment and can last you several years, depending on your maintenance. The same goes for casual clothing. Try to purchase clothes that will outlast the season’s fashion trends.
• Footwear: The last thing you want is to buy the more affordable running shoes on sale and end up hurting your feet because the quality wasn’t right. Footwear is an essential purchase because of its everyday use. While you don’t have to buy a $200 branded pair of shoes do your research and find your go-to company. Don’t cheap out and hurt your toes!

2. Invest in Home Efficiencies

Think about it: how much of your monthly expenses go into paying your utility bills and home-related affairs? There are ways you can save here.

Consider investing in energy-efficient products that will reduce your electricity uptake. They can be expensive upfront, going up to thousands of dollars, but you’ll save more money on your monthly utility bills than you did before, making it a worthwhile purchase.

Examples of these products include:

• Insulation: This can provide one of the most significant cost-savings for households (up to hundreds of dollars from year one). Although on the pricier end, having insulation solutions installed will benefit you over the years.
• Lighting: Did you know that LED bulbs use less energy than the traditional incandescents you may have installed in your home? They also last longer (up to 22 years!)
• Appliances: Drink lots of coffee from the local Starbucks? Invest in buying an espresso machine. Have an old, faulty fridge you haven’t replaced? Consider buying an energy-efficient one that can save your money every year. Look into your home appliances and make smart decisions on where to buy and invest.

3. Purchase Smart Memberships

Memberships at the supermarket or for essential daily services may seem frustrating. Why pay an extra fee when you can just buy your milk on the go, right?

On the contrary, having memberships with your local Costco or Amazon Prime for online deliveries can save you more money annually. Some offer exclusive discounts and free delivery to its members, with other added benefits (like Amazon does with Prime Video and Music!)

With the current pandemic, you may also buy more groceries in bulk to avoid repeated trips to the supermarket. This makes sense for items like rice, flour, sugar, and salt.

Consider availing smart memberships this way to save out on multiple delivery costs and the added mark-up on numerous individual purchases of grocery items.

4. Buy A House!

Owning a home is a significant investment, and in some ways, it can be more expensive than renting. Property taxes and regular maintenance may make it seem daunting.

But having your own house is a great way to build your assets. You no longer have to worry about the landlord, the monthly rent check, or that little crack on the wall you may have caused. You become your own landlord!

But buying a home is no light decision. If you’re financially ready to invest in your own house, make sure you find one that meets your needs and budget.

Keep in mind the neighborhood you wish to live in too. Moving to a nicer one may include higher expenses in local taxes, but other minimized payments due to the move (like insurance and travel) can offset this.

5. Ditch the DIY

You can be a jack-of-all-trades and learn DIY fixtures and hacks on your own. But there’s still a significant difference between hiring a professional for a job and doing it yourself.

Whether it’s repairs and maintenance or managing all your finances, consider hiring an expert for the job. They’re trained to deliver success and have better insights into these services.

For example, if you’re looking to invest your money in shares or want to manage your tax returns better, it might be a good idea to consult with a financial advisor such as a qualified CPA. Whereas the cost of hiring may be expensive, this can profit you in the long run when you make good returns.

Regarding maintenance expenses, while it’s acceptable to handle minor fixes on your own, it’s better not to risk your safety where there may be severe damage (for example, to your plumbing and heating or your car).

Avoid the ‘easy fix’ mentality where your living, safety, and health are a concern. It’s always a good idea to splurge here, especially if it ensures your security.

You never know when a quick-fix can strengthen into a bigger, more persistent problem.

Make Smart Purchases

Spending more is an excellent way to save, but it all depends on your choices, lifestyle, and financial condition.

Do your research, look at the options, and make a guided decision. You don’t want to empty your bank account by investing all your money upfront in these things.

Remember: the lesson here is paying the right amount for good quality so you can gain long-term value through the savings you make.

So, what are you waiting for?

Begin your 2021 with smart spending.

Author Bio

Beatrice Manuel is a freelance writer for hire specializing in finance and digital marketing. She helps brands fulfill their vision through words by producing sparkling content pieces that convert. When she isn’t helping her clients win readers, you’ll find her working on her next novel and posting on her literary blog.