Making Smart Spending Decisions

In my ebook, 10 Ways to Go Broke, I talk about the importance of making spending decisions that support your goals and your financial life. As a former professional athlete myself, I know that the world of pro sports can leave you feeling like you need a new car (even if you already have three), or that you need to spend thousands of dollars on a single meal.

After six years in the NFL, I can attest that it truly is a fantasy world. Spending this kind of money with any frequency is considered the norm, and it’s easy to get caught up in a celebrity-type of lifestyle. However, there are ways you can take a step back and make smart spending decisions that will benefit you both now and in the future - and you can do this without depriving yourself or your family of occasional “splurges” on things you want!

Sleep On Spending Decisions

The first suggestion I’d suggest you implement in your daily life for big and small purchases is to sleep on it. In my book, I talk about my experience at a car dealership. Several years ago, I was looking at a stunning, brand-new Jaguar XF. I had called my financial advisor a few times, and he didn’t picked up. I knew I could afford the car, but I chose to walk away and sleep on it.

On my drive home, I realized I didn’t need that car. I already had three wonderful cars in the garage at home. I had formed an emotional attachment to the car, and had followed my “I want this, so I’ll go get it” gut reaction. But when I sat back and truly thought about it, I realized that the $60,000 that the car would have cost me could be $456,000 if I turned around and invested it tomorrow in a retirement fund (given 7% return over 30 years). Had I not slept on this spending decision, I would have made a choice that, while not necessarily bad, wouldn’t have been as financially savvy for me in the long run.

Run Your Own Race

Many people are faced with tough spending decisions - and these choices can be made more difficult when we compare ourselves to others. You’re probably not consciously thinking that you feel this way because you’re being influenced by your peers - but it’s a fact of life. We want to “keep up” with our peers because it makes us feel good, and we like having things in common with people we like and respect.

The important thing to remember is that your goals and your finances are unique. Nobody else has the same financial life that you do. When you are considering making a big spending decision, take a hard look at whether or not it supports your short and long term goals. Let’s take a look at my car dealership experience again.

I wanted to buy the new Jaguar I had just taken for a test drive, but having more “stuff” is rarely a financial goal of mine. Instead, I prefer to donate money to organizations and charities that mean a lot to me, and spend time with my family. Recently, my wife and I took our kids to Disney World on vacation. My money was so much better spent on the experience and on making memories with my family than it ever would be on a new car or more “stuff” to clutter up my space. The money we spent on a vacation for the whole family left all of us feeling more fulfilled, and like we had spent according to our goals and values. That is an amazing feeling.

So, next time you’re considering making a big purchase, ask yourself whether it lines up with how you want to be living your life. Do you feel that it’s going to push you along the path toward a financial goal? Or is it going to cause a dramatic setback that you can’t undo? Don’t look to how others are spending their money as a guide, look to yourself. When it comes to your personal finances, you have to run your own race.

Ask For Help

In professional sports, you have a coach. Actually, you probably have multiple coaches, trainers, and other professionals who are there to help you perform at your best. You don’t expect to walk out onto a football field and play your best game without their help and guidance - so why would you expect that you can DIY your financial planning and come up with the best end-result?

Asking for help from a financial planner can be a game changer. Together, you’ll work to set goals, create a plan for daily spending and saving, and come up with a long-term investment strategy to prepare you for retirement. If you want help with your personal finances, I’d love to talk to you. Reach out to me today to book a consultation phone call - together we can help you define what you want your financial future to look like.