Tuesday, March 6, 2012

Not All Savings are Equal: The Importance of Spending on Things That Matter

By Kyle Slavin
Let’s be honest for a second. We’ve all taken a hit over the last few years, and that hit was focused directly on our wallets. Target acquired: bank account eliminated, ramen noodles for a month. Even the most lavish of folks are cutting back on their expenditures, thinking out their financial plans well in advance, and adjusting accordingly to this awful economy. But remember: there is a difference between the frugal and the fiscally anemic, the spendthrift and the downright broke. 

The difference lies in the planning and research behind your purchases.

Use this moment to understand the usability and value in your spending – believe it or not, this affects you every single day of your life. Is it more valuable to save $50 at the grocery store, or to save $50 on a pair of jeans? To eat at a high-end restaurant on one fancy night, or to overspend on drinks every weekend? And when is it prudent to pay more for something of value?

Let’s start in a simple “dos and don’ts” format:

DO map out your monthly payments, and compare them to your incoming funds. This sounds like the simplest advice ever, but you would be surprised at how many folks don’t make a balance sheet. If you bring in $3500 a month, you may think you can afford to buy the satellite cable package on first glance.  (“But it has HBO for free!” No, it doesn’t.)  Tally up those bills, and you may realize that after rent, car payment, gym membership, and your custom laser hair removal, you only have $200 to work with. And you haven’t even eaten yet! Be smart – plan ahead.

DON’T buy out of want, but rather out of need. For example, a certain American Gentleman writer is an avid basketball player. He finds himself with five or six pairs of basketball shoes at any given time, and he knows they each cost $70 or more.  For someone so fiscally responsible, how could this happen?

Well, between sly corporate advertising and our own personal dependences, most of us have a weak spot somewhere. His just happened to be basketball shoes.

To combat this, he first realized his weakness and addressed it: no more shoes until the previous pair were a liability. That means no matter what sales there were, no matter what brands were offered, he  had to stick to his guns. With time and wear, those six pairs of shoes whittled down to two pairs, a much more manageable number, and he ended up saving around $70 every couple months. 

So, whats YOUR weakness?

DO spend more on something that will last longer, or get more use. In the long run, this will save you money.  Do you wear jeans every day? From a fashion standpoint, you shouldn’t, but that’s not the point. If you utilize those jeans regularly, it is worth it to get the costlier brand-name pair rather than the discount pair. Yes, it is more expensive. But they will last longer, look better, and be more reliable in hems, buttons, and inseams than the alternative. What’s the point of saving a couple bucks if you are going to wear them out sooner, and have to buy jeans again?

This same mentality applies to anything you use every day. If you put on cologne every time you step out of the shower (as you should), make your purchase on the right scent and not the right price. If you find yourself constantly in a suit and tie, spend the extra $200 to make sure that the fabric will not wear, and will fit you fashionably. You will feel better, act more confident, and end up saving money in the long run.

DON’T make purchases based on your ideal behaviors, but on your actions. We all have tennis rackets, surf boards, jewelry, musical instruments, and bicycles that only exist to collect dust. We frown at them, wasting away in a corner, never to see the light of day.  Why did we buy that!?

If you want to start a new hobby or a new look, don’t purchase everything first. Try it out for a month, and see if it is something that will realistically enter into your life. If that means borrowing a friend’s trombone for a little while to make sure your neighbors are okay with it first, then go borrow it! The marching band can wait!

DO treat yourself, but make sure it’s something worth the treat! In Los Angeles, we have recently found that a casual night of drinks and appetizers can hit the $100 threshold with lightning speed. And that’s on happy hour!

What we realized is that a night at Mastro’s at $175 is a much more economic and worthwhile expenditure than several nights at Pink Taco at $100.  You are allowed to splurge! Just make sure that it’s not every week, and that it’s something worth splurging upon. 

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Spending money to save money may seem counterintuitive, but it is a smart practice. If you are wise in your purchases, you will enjoy them for a longer duration – and look good doing it.

This behavior is available to men in any income bracket, and worth considering. To be his best, the Gentleman must feel his best, and that means taking pride in the clothes, style, and accessories with which he surrounds himself.

Be smart. Buy smarter. And good luck with those trombone lessons.

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