Money, blood and oxygen share an important trait, though this trait is often neglected or misused with money. We know that blood must continue to flow throughout your body in order to carry oxygen and nutrients to your cells, and to flush out toxins. That is why exercise is so important and why a sedentary lifestyle is linked to a myriad of health issues and diseases. We also know that oxygen must flow throughout your respiratory system in order to keep you alive and functioning. Too much lack of oxygen, whether from a stroke or suffocation, can cause serious and irreversible brain damage.
These things must flow in our bodies so that we can live a vital life! But did you know that money is also something that should flow throughout your life? Perhaps this is not as dire a need since it is not directly linked to physical consequences, but it is an often unknown or misunderstood principle with serious impacts. We often hear about how important it is to save money, but we aren’t usually taught that it is important to spend money as well. They key is to understand how to spend it in the most advantageous way.
Before delving into this principle, let’s note that while it should benefit readers of every income level, some will not have as much liberty to apply this concept to their lifestyle at this time. The practice still applies should opportunity arise, but it will be more subtle for those working with a smaller income. Not all of us have the same leverage over some aspects of our lives, and so not everything is universally applicable (though that does not mean that won’t change for the better in the future!). We’ll dig deeper below but I’ll first clarify why that may be.
Disposable Income is What’s Leftover After Meeting Basic Needs
Depending on your income level, the way you manage your money varies greatly. If your income is lower compared to the living expenses of where you live (which vary greatly across the USA and the world), then most or all of your income will go to necessities such as food, housing, clothing, childcare, transportation, and medical needs for you and your family. Those whose incomes do not sufficiently meet these needs have to make difficult choices regarding money. Having support networks can help but poverty is taxing and there simply is no money left over to save or spend on non-essential things.
Whether you are dealing with poverty now, have in the past, or know others who are or have in the past, nobody should have to be in this place longer than temporarily. In the best case scenario, income either increases or expenses decrease to the point where you can start to save and eventually have better options at your disposal as to how to spend your time and income. In the worst case scenario, nothing changes – or the situation worsens – and you are left fighting every month to pay your bills and feed your kids.
Nobody should have to live in poverty, especially with children, and while there are programs in place in the USA to help people get out of poverty, accessibility varies tremendously and is sadly lacking in many places. Still, I believe that there is potential for everyone to move beyond poverty and for everyone to have a comfortable enough income to meet their needs and save for the future. This requires many support systems and programs in place – both on a legislative level and on a community level, and it also requires that we believe that every person and family, including ourselves, deserves at least a living wage and has the potential to meet their needs.
If your income is very high, to the point where your and your family’s financial future is well established and college funds and retirement expenses are more than covered for yourself and all immediate family members for everyone’s lifespan, then money should already be liberally flowing across various avenues in your life. However, that may not always be the case depending on your current and future investment plans and so this discussion may be helpful. People on the same income level can vary greatly in how they manage their money, depending on their needs, values, and intentions.
Spend Disposable Income With Intention to Improve Your Life
This discussion is most relevant to those whose incomes are currently at least at a living wage. In other words, all immediate needs are met for you and your family and you have a comfortable enough savings cushion to not have to live paycheck-to-paycheck. You have health insurance that doesn’t deplete your entire net income and enough disposable income both to save each month and to spend on non-necessities such as new books or dinner at a restaurant. You are not wealthy enough to retire right now and live comfortably for the rest of your life, so this amount of income or at least some portion of it must be maintained throughout your working life until you have saved enough money for retirement and other lifelong expenses for yourself and your family.
Now for the key message: you need to spend money in order to maintain an open mindset that allows you to receive money. This concept is aptly driven home by an accomplished business coach named Tamara Arnold who explains how the way we view money and expect it to manifest (or not) in our lives actually impacts our energy and our ability to receive it. I think it’s safe to say that this is contrary to what many of us have either been taught or at least what we subconsciously believe. We know how important it is to save money, but do we know that it is important to spend money, too? Here we’ll address some reasons as to why that may be so we can understand both where we are coming from and how we can re-envision our life’s potential.
Why People With Disposable Income Are Scared to Spend It
Most middle-class Americans are no more than a few generations removed from poverty, or at least the constant threat of poverty. Think about your childhood, that of your parents, and that of your grandparents. Maybe you were considered working class and never went hungry or without a home, but your family was working on a property in return for free rent on top of working full time. Maybe your parents grew up with just enough income to meet their essential needs, while your grandparents grew up in some level of poverty and your great-grandparents fled whatever country to scrap out a living in the Land of the Free.
Perhaps you have no memories of actually having to worry about money during childhood, or at least it wasn’t a concern that was voiced in your household or evident in your house. And today you have enough of an education to qualify for a decent enough job to earn a decent enough income so that you never really worry about poverty. But, for some reason, you spend an inordinate amount of time standing in the grocery isle, trying to decide whether you want to buy the nicer-looking rice because it costs 39 more cents than the lesser-quality rice. I’m not advocating careless spending without being aware of where you put your dollar, but I think that many of us are overly stingy on how we spend to the point of being illogical and even detrimental.
A Primary Suspect: The Scarcity Mindset
Call it cheap. Call it scarcity. Call it stingy. But whatever you call it, this mindset comes from several angles. Many of us had it ingrained in us by our families, whose own families ingrained it in them. Older people remember when times were hard, and generational memories are hard to shake without intentional inner work. Many of our grandparents lived through the Great Depression or grew up in its aftermath. Most were shaken by the effects of war.
The rural lifestyle was much more common in the first half of the twentieth century, and rural society lacked many of our modern conveniences and what they would have considered luxuries (if you think about it, our modern lifestyle does afford us many luxuries). People often harp about how hard it was back then, but as far as physical survival and modern comforts we take for granted, it really was. People learned to make do with what they had, to get creative with their resources, and to spend as little money as they could in order to save for a rainy day.
The upside of this cultural fabric is that it lends to hardworking and prudential life habits, which are good traits that can in turn reap good rewards. The downside is that it can ingrain in people’s minds a death grip on money to the extent that, once they are living comfortably and no longer need to count every penny, they still retain that mindset. After all, if that helped them to get to where they are now, why change something? There are a few important reasons why that is not a mindset worth keeping. One is that, of course, it is no longer necessary when you have a stable, comfortable income. Like many things in life, something that serves us well in one season can become unnecessary in another. It is okay to shed it and move on.
A more important reason the scarcity mindset is not worth keeping is because it prevents people from investing in things that could have great benefits in their life, simply because they don’t see it as a necessary cost. They don’t see value in things that exact a cost beyond what they are used to paying, even if that cost is literally pennies compared to their own assets. In a sustainable economy, you get what you pay for. They don’t accept that it is important to spend money appropriate to the level of value for any given commodity.
The Hoarding Mindset: ‘More Is More’
Another reason to shed the scarcity mindset is its unpleasant tagalong cousin, the hoarding mindset. If you ever want to shrink your physical space, start hoarding and watch your square footage gradually disappear. As we know, hoarding inevitably leads to clutter in our living place, but many people don’t even realize they’re doing it because it can be so subtle, especially if one has ample room. Most of us don’t keep more than one or two spare cables, for instance. Yet someone may collect them and fill a box with nothing but spare cables, ‘just in case they’re ever needed.’
Likewise, someone may purchase enough bulk paper towels from Costco to fill a small classroom, or they may continue to pick up the same type of item every time they go out, ‘just in case.’ And while, yes, I agree that perhaps they will all be better off than the rest of us during a zombie apocalypse, they are giving their fear of scarcity the upper hand by overcompensating with their collection habit. Rather than putting faith into an apocalypse-free future, they are refusing that reality with their actions. Their argument will always be that it is better to have too much than not enough.
Those to whom this discussion is most relevant – who already earn a living wage and have a comfortable enough savings to live without fear of losing one month’s pay – would do well to remember that the ‘better to have too much’ adage does not apply only to physical objects we acquire. It also applies to nonphysical commodities such as time, experiences, and relational health. So when you do not have the money to invest in a life-changing weekend seminar because you spend too much money on buying new clothes, it is actually not better to have too many clothes, since it prevented you from investing in a fantastic experience. If we ‘collect’ DVDs and find ourselves watching a movie every weekend just to justify our purchases so that they ‘don’t go to waste’, too many DVDs can cut into time for quality connection with family members or close friends.
When we have too many physical objects in our home, we then have to acquire furniture or storage bins in which to keep them, and this can be costly and time consuming. Not only that, but belongings need to be maintained and that can be a huge time sucker (any home owners?). The public at large and especially younger adults seem to have caught on to the idea that less is more, in terms of physical items. However, many people still flirt with the hoarding mindset when they accidentally accumulate twelve opened bottles of hair products, or eight different salad dressings. It seems that we can’t quite let go of the illusion of control over what we claim as our own.
When Refusing to Spend Is Detrimental to Our Life
People work hard. They put in the hours and the energy to do a job well done and reward themselves with material comforts. But many of these same people refuse to spend money on much-needed therapy services because they see it as a waste of money, or at best, not necessary. There is no immediate gratification proportionate to the up-front cost, and so it is not viewed as a valuable investment. Or, they consider an overseas vacation too expensive, even though they spend astronomically more on a new vehicle. The amount of money spent on the vehicle could be saved every month for a vacation fund or life-enriching experience, either before buying a new vehicle or after (or during, if a cheaper vehicle were acceptable). The scarcity mindset only allows spending on what is considered essential or very cheap. What if we changed our mind about what is truly essential?
My Journey Through the Scarcity Mindset and Beyond
To an extent, I have been guilty of the scarcity mindset. I used to be painfully diligent about keeping track of my expenditures and keeping a tight leash on my wallet. At first, this was a necessary trait. I earned a much lower income at that time and was paying off student loans so I was always painfully aware of my budget. We still own the used car I drove back then (all 21 years and 299,600 miles of it). I think it is wise to understand where your money is going and to make informed decisions about that, but years later I still worried over unexpectedly higher costs for whatever items/services than what I was used to paying, even with a higher income.
For years, I still operated on low-budget mode with my spending habits and, unfortunately, with my time. I would spend so much time balancing my checkbook and ‘checking’ receipts that it began to get exasperating. At my husband’s bidding, I eventually stopped manually doing those calculations all of the time (which meant I had to trust modern cash registers to not make mathematical errors…even though, as computers, they can’t). This sounds excessive, but I was so adamant about making sure I somehow didn’t get ripped off. I took pride in my modest spending habits. Thankfully, though, I outgrew them.
Money comes and goes but time, that temporal god we just can’t pin down, will never come back. I eventually did the math and figured that my hourly rate at my job was worth far more than the time it would take me to figure out how to fix something as opposed to just ordering a new part or paying an expert do the job. In the same way, my time was not worth doing more than simply checking over my debit or credit card statement to make sure that it only included vendors I actually paid and prices that matched the type of purchase. Most importantly, I began to value my own worth enough to invest in myself on classes or other enriching experiences. I give more liberally to charitable organizations without worrying about how it fit into our budget, and there is something so freeing about that.
See Smart Spending from a Healthy Perspective
Instead of viewing a purchase as simply a depletion from your wallet, consider also how it benefits you and how it benefits the receiver. We cannot only see monetary value. We have to see total value from a holistic perspective. I’m never thrilled to pump cash into giant corporations with excessively wealthy executives at the top and an army of workers earning below a living wage with insufficient or nonexistent benefits, but I have come to embrace paying a bit more for similar transactions at smaller, locally-owned businesses that exemplify what the USA has always touted: entrepreneurship.
Instead of buying a beverage at a café and thinking, ‘what a rip-off – I could make this at home and spend half the cost on ingredients’, I am grateful that there is a service that spares me the effort and time and am happy to support that business while enjoying my beverage and the convenience of the transaction. It is important to spend money because it is a natural flow that keeps us open to receiving and expecting more money in return.
Understand the Difference Between Smart Spending and Careless Spending
This is not a license to spend mindlessly and recklessly. You can spend the same amount of money but with a very, very different ROI (return on investment). There is a huge difference between spending $200 on a night at the bar with friends, starting with $15 cocktails and then buying everyone shot after shot of top shelf liquors, as opposed to spending $200 on a Pilates package.
Perhaps you have an expensive and wild night out once a year or so (responsibly and in safe company with a safe plan for getting home, of course), but it is wise to strongly consider your goals and the consequences before regularly embarking on that kind of spending. Besides having a really fun time with friends in the moment (and supporting a local bar), is there any long term benefit to such a habit? How many alcohol units are you consuming and what are the short and long term consequences to your health? How will the hangover affect your health, outlook, and productivity the next day? Will you be as loving a human to your family or friends, or to yourself? Will you have the energy to engage in meaningful connection with others, or to exercise or spend time outdoors?
On the other hand, if you instead spend only $40 a month on a night out with friends, would you not still enjoy yourself and have a good time with moderate alcohol consumption? Would you not then be able to better connect with them and be more present, and appreciate the beverages you consume while enjoying subtle flavor nuances? The Pilates classes you could then afford would deliver far-reaching health benefits. Substitute Pilates with any activity of your choice – a soccer league, martial arts, boxing, dancing, a swim club, hot yoga, or races – and that $200 (or less) you invest in yourself provides a generous supply of physical, mental and social benefits. Your ROI is much higher than that of the wild and expensive night out once a month, even if the positive effects are less intense or immediately obvious at first.
The Takeaway: Learn How to Spend Money with Intention
Spend liberally and wisely within a budget reasonable to your income. Don’t get caught up in unseen lifestyle creep, but keep an established flow of money to live freely in the present while still preparing for the future. Don’t refrain from spending on something that would truly benefit you and provide real joy just because it doesn’t seem ‘necessary’. Remember that by investing in yourself, you are nurturing your individual passions and potential and expanding your inner space. This helps you to not only feel better but to love better and perform better in all areas of your life, which invites more opportunities as well as more opportunities to receive money.
There is a high ROI on wise investments and that is why money needs to flow. Continue to save what you need to save to provide a safety net and to meet your goals, but remember to give as well. Consciously give to yourself, consciously give to others, and consciously to give to the local economy. Money flows productively in your life when you maintain a healthy balance between wise saving/investing and spending on things that are meaningful and bring joy to your life! You have to believe you’re worth spending money on because after all, if you don’t, then who will?