You Don’t Need to Stop Spending, but You Do Need to Pay Yourself First

by Miranda Marquit · 8 comments

wallet full of money
I’ve been getting a lot of flack for how much I spend lately. I’ve been told I spend too much on a cause I’m involved with. I’ve been told I spend too much on going to the spa. I’ve been told I spend too much on travel.

It’s true that I like spending money, but just because I’m spending money doesn’t mean that I’m being totally irresponsible about it. What’s actually important is to figure out what really matters to you and your future.

So take a step back, and reconsider what you’re spending money on.

Once I did that, I realize that while I spend what other people might consider more than I should — or that I spend money on things that I shouldn’t — the reality is that I still pay myself first.

Committed to My Future

Before I have my nails done or take my son to Salt Lake City for the weekend, I pay myself first. The very first items that come out of my pay are:

  • Needs (housing, groceries, insurance, etc.)
  • Retirement account contribution (Roth IRA, but I’ll have a 401k soon as well)
  • Emergency fund contribution (kept in a taxable investment account)
  • Charity and causes I’m interested in
  • My son’s education (529) and extracurriculars
  • Travel fund

Following this approach allows me to shore up my financial future before I spend a lot of money on other things. So, even though I spend money on a bunch of stuff that isn’t necessary (and it really isn’t necessary), I only do it with money that hasn’t been earmarked for my future. Most of my financial commitments are automated, so it’s easy for me to make sure that the retirement account contribution is taken care of before anything else is.

I’m committed to my future, so I pay myself first before I spend on anything else.

Enjoy My Resources

Once I’ve paid myself first and made arrangements for my future, I don’t have a problem with spending my money until it’s gone for the month. (I still do keep a buffer in my account though so it’s not totally depleted.)

I don’t feel the need to accumulate a big pile of money. I am doing what I need to promote a comfortable future and provide a solid start for my son in his life. Other than that, I view money as a tool. It can be used to make my life more meaningful and interesting. I like having experiences, I enjoy helping others, and I like spending time with the people that matter most in my life. If there are ways money can help with those items, I’m not against spending it.

Don’t worry so much about the way others say you should spend your money. As long as you make sure you are preparing for your future, getting rid of debt, and saving for a rainy day, I don’t think there’s anything wrong with spending money on things you like. Take care of your most important priorities first, build a solid foundation, and then spend as you wish with what’s left over.

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{ read the comments below or add one }

  • While it is important to remember why you work so hard in the first place, I.e in order to live a good prosperous life.

    While I agree that keeping an eye on the money jar is an important consideration for anybody, you are also entitled to spend a little from time to time too.

  • Ryan G says:

    Pay yourself first, and enjoy what’s left. You’ve worked hard for the money, so you should be able to enjoy it as long as your obligations to yourself and your future are met.

    • David Ning says:

      I’m now at the phase where I should be able to enjoy more of what’s left but I have a hard time pulling the trigger on spending. I would scrimp, scrimp, scrimp and then buy something expensive, instead of the better way which is to be more relaxed about everyday spending and likely spend less on the really expensive stuff. I’m getting closer to changing my attitude though so there’s hope for me! 🙂

      • Ryan G says:

        I think it is OK to scrimp, and then splurge on the expensive purchases. When I buy something nice/expensive, I tend to go for better features & quality and not worry as much about the price. Especially for something that is going to see a lot of use, I think it is good to spend money on features and quality.

        For example, I recently purchased a running watch. I chose the model with GPS and heart rate monitoring. I didn’t need the heart rate monitor, and the price difference was something like $50-$80 between the base model and the model with the heart rate monitor. However, I’ve gotten a lot of use out of the device and don’t miss the extra cash.

        • David Ning says:

          You are right – sometimes spending extra is worth it. My spending issue is when I scrimp on everyday stuff and then spend a thousands of dollars on something I don’t need. It’s still affordable and I derive a ton of happiness from it though so it’s so far been ok.

  • Good points. After all it is called “disposable income” for a reason. Your theory sounds perfectly reasonable to me.

    • David Ning says:

      The idea of a disposable income is one that I really have to get behind. I’m awesome at saving money but I really need to start spending a bit more, and setting a category for disposable (unnecessary) expenses is something I need to incorporate in order to live life a bit more.

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