Spending money is fun!!! You are in charge. Everyone wants your
money, including you. Whether you are spending money to buy
T-shirts that you are going to print and sell, buying a week at a camp
for young musicians or buying some very cool clothes, you should
think before you spend.
Spending money can give you great satisfaction. Avoid throwing
away money on stuff you're only going to care about for an hour.
That way you get the most bang for your buck... and you become
more powerfully motivated to earn your money.
The trick to spending your money is doing it in such a way that you
get to have fun with it WHILE you increase the value of your portfolio.
That way as time goes on, you'll be able to continue having fun with
your money without worrying about going broke along the way.
Aha! We are back to FINANCIAL FREEDOM! Remember, that's how
you win! Now, let's look at some of the secrets you can use to spend
your money wisely.
1. THINK BEFORE YOU BUY
The fi rst secret is the most obvious. Think before you buy something.
Purchasing without thinking is so common that stores have even given
it its own name: impulse shopping. Limit your impulsive buys to
things equal to or less in price than a single scoop of ice cream.
2. TAKE A BREATH
Next time you're out and you see that new game or shirt or CD that
you just 'have to have,' think about whether you need to buy it right
now. Can it wait a day? Often times the same item that seemed so
cool the fi rst time you saw it doesn't seem that great the next time
or is available for a lot less. If you're not sure, try walking around the
store for a while, carrying the item with you. Look around at all the
other items. Think about how long it took you to earn the money
you're about to spend and how long it will take to replace that money.
You'd be surprised how often you'll end up putting
the item back.
DISCIPLINE! When you exercise something,
it grows stronger. Excercising your discipline
puts you in charge of your money and your
future. Don't let money ever be the boss
of you. When you tell it to sit, it sits. Tell it
to go get a bike, it goes and gets a bike.
3. COMPARE BUT BE REAL
Comparing prices is an easy way to save. Finding stores that have the
best prices can save you a lot of money on the things you like to buy.
This is called comparison shopping. Finding a store that sells the
soda you like for 50¢ instead of 75¢ is great, but don't spend all day
looking for it. For smaller priced items, say under $20, the savings may
not justify the effort. Remember, your time is valuable too. Finding
stores that you know have goo
The exception to this is with larger, one-time purchases. This is where
Comparison Shopping can really save the day. Luckily, Comparison
Shopping has been made much easier thanks to the Internet.
While you don't have to make the purchase online, you can
check the prices of many different kinds of items online so that
you are educated about how much something should cost.
Above is an example of a good product price comparison.
Which place is the best buy? Online or Retail?d prices on things that you purchase
the most is good enough.
4. QUALITY IS KEY
Don't be afraid to spend a little bit more for something that is of
recognized quality. Quality has a lot of value. Doing research on
an item before you buy it can help you make the best decision.
For example, before you buy a bike, talk to your friends who do a lot
of biking about what they like and don't like about their bikes. There's
no reason to repeat their mistakes. Next, go online and look up Web
sites that compare bikes and review them. The company that makes
the bike will always say it's the best, so try to fi nd a source like a bike
magazine Web site that doesn't make money by selling you bikes.
Once you know more about what makes a good bike, you'll be able to
buy your bike with confi dence. Plus, it's fun learning about something
you're going to own. It makes it more special and meaningful.
5. BRANDS AND BARGAINS
At your age, you are part of the biggest target audience of ad
campaigns pushing the importance of 'brands.' Manufacturers spend
millions of dollars trying to make you believe that their product makes
you jump higher, look better, run faster, get more dates, or be more
accepted just because of the logo on their product. Part of being a
smart consumer is educating yourself on the difference between hype
and reality. Reading reviews and, if possible, talking with experts can
help you sort out the truth behind the advertising. Remember, ads and
commercials are designed to make you spend your money on their
products. Think about why you are buying one brand over another
before you part with your money.
6. REBATES, SALES AND COUPONS, OH MY!
We've all seen the '$5 Off Mail-In Offer' coupon attached to an item in
the store. Sometimes we even buy the product because of the coupon,
thinking to ourselves what a great deal we're getting. Then, when we get home, we end up throwing out the coupon with the packaging
because it seems like too big of a hassle. These coupons are actually
advertisements designed to entice you to buy the product. Studies
show that 95 percent of the people that bought the product didn't
take the time to mail in the rebate. The companies that print them
count on this laziness. Before you buy a product because of a cashback
offer, think about whether you will actually send in the rebate.
If not, you may be paying more than you should.
Likewise, retailers will often send you coupons in the mail offering
special discounts or notices about limited-time sales events. Retailers
rely on people visiting their stores. They are betting that these offers
will encourage you to go to their store over other stores, even if you
don't need their products. They know that once you're there, you will
probably buy more than the offer requires and they will be able to take
more of your money. Just because a store offers a coupon or is having
a sale doesn't mean that you should buy the product.
Not all coupons are bad. In fact, coupons can be an excellent way to
save money. Using coupons for the things you normally buy allows
you to beat the companies at their own game. Make coupons work for
you, not the other way around.
FUTURE PLANNING (GOALS)
You've probably heard your parents talk about budgeting.
All that means is that you should keep track of how much you
make, spend, save, and then choose wisely where your money goes.
Being on a budget isn't a bad thing, it just means that you have plans
for your money (like making more of it!) and don't want to spend it
on silly things.
Keeping a budget gives you the power to meet your goals and not
wonder why your money keeps disappearing. If you want to make
more than your parents, it's a good idea to begin setting goals.
Remember when we talked about big goals like owning your own
music studio, amusement park or pro-sports team? Those goals
take time to happen, but there are things that you can start planning
for immediately. If there's a bike that you'd like to get, you'll need
to fi nd out how much it costs and how long it will take you to save
up the money. If you're thinking about starting your own business,
you'll need to make a plan for what materials you'll need, how much
they cost, and how long it will take you to get the money.
Another way of thinking of purchases is to buy items that will satisfy
your desire for cool stuff AND help you to build your wealth (this is
a bit of a brain twister). Let's say that you are going to use a bike to start
delivering fl yers for a restaurant in your neighborhood, once a week,
for $20. Your capacity to earn money will be higher once you have
the bike. Your bike is part of your assets. Now, you're starting to think
like an entrepreneur!
BIG BAD DEBT
When you're in debt, it means that you owe more money than you
have. That money could be owed to a credit card company, a bank, a
school or even a friend or family member. The best way to deal with
debt is to avoid getting into it in the fi rst place. This means that, starting
today, you should try to spend less money than you earn. Sounds easy,
right? It can be. The problem most people get into is that they allow
themselves just a little bit of debt so that they can buy something they
think they really want, like a new game. However, they're more likely to
spend their money on a second game before they're done paying for
the fi rst game. Next thing you know, the debt has grown to the size of
a giant beast, larger than anything in any game, and fi ghting it just got
a lot harder.
IS DEBT ALWAYS BAD?
There will be things in your life that you'll want that you won't be able
to afford without credit, like a car or a house. When starting your own
business, most people need to borrow money to get things going.
Most institutions need proof that you can responsibly handle having
debt. They look at a score that you've been assigned called your
credit rating. Just like colleges use your grades to tell what classes
you took and how you did in them, banks and other lenders read your
credit history to tell how you have paid back companies that have
lent you money in the past. If your credit rating isn't high enough,
they can refuse to lend you the money. The more responsibly you
handle your fi nances now,the more responsiblyyou'll handle credit and the better rates you'llget for that.
SO WHAT DO I DO?
While starting a credit history is a good idea, you should talk to your
parents about it before you do anything. They probably have strong
feelings about credit cards and may be able to offer some advice.
If they are willing to get you a starter credit card, you should charge
only small items and pay off the entire balance on the card each
month. This way you avoid large interest payments, while starting
to build a positive credit history.
To learn more about credit cards, keep reading,
or go to gotmoola.com and try out the credit
card tools! |
