I get emails from people asking me about the best ways to spend money. Some are more specific than others. How can I use my money strategically? They ask.
I have a few ideas; not the obvious cookie-cutter ones but some garden-fresh ones.
I decided to put together all these ideas in the form of an article instead of sharing them with the askers via email. So without further ado, the best ways to spend money are:
Save yourself from debt
Our nation is badly suffering from debt. Financial data for the last ten years have been alarming. Of the total $20 trillion debt that the country is having right now, it took almost 40 years for it to incur the first $10 trillion, which means it has incurred the remaining $10 trillion over the last ten years.
It’s scary if you think about how fast is the rate of increase. What’s even scarier is that nobody including the pressed suit wearing executives of the Wall Street or the bespectacled pundits of academia who make wrong predictions about the future, know what’s up ahead.
You can’t do much as an individual to change the country’s bleak future. However, you can save yourself from debt. When you have money in the bank, bank reps try to persuade you to take a loan. Don’t fall into their trap. Remember, growing money is one thing and inflating it is another. You want the former, not the latter.
Buy cheap merchandize
Ask yourself; is there any reason to spend three times more to buy something that has nothing spectacular about it other than fancy design compared to its cheaper alternative? The answer is a resounding no.
What happens when you resist the impulse to buy something that’s expensive and decorative but adds no real value? You save more money. It’s basically a strategy. Those who follow this strategy spend money to grow money. Unfortunately, when tempted by instant gratification, most people cave in and fail at implying this strategy. Don’t be one of them.
Invest in precious metals
When the economy of a country is in a bad condition, people look for monetary safe havens. Precious metals like gold and silver are all weather safe havens. The prices of these metals go up in times of economic meltdown. When things become normal again, bullion prices move a bit down but tends to stabilize after crossing a threshold mark.
In layman’s terms, investing in precious metals can never be a wrong decision. When the currency value is down, bullions become expensive. And when inflation is over, bullions become less expensive than before but not too expensive like fiat currency. Hence, precious metals are a good investment in normal times and great investment options in times of collective economic frenzy.
If you don’t have enough money to invest in real gold or silver, consider investing in exchange-traded funds (ETFs). These funds mimic the price ups and downs of real precious metals. There are several ETFs to choose from.
Take investment seriously
Investing in the capital market is the quickest way to grow your money. It is also the quickest way to lose your hard-earned money, so exercise caution when investing. To make strategic use of your money, select stocks carefully. There are a few things that you need to consider.
- History of the stock: By history I meant how the stock has performed during a bear market. If it never hit 52 weeks low or maybe hit just one time during a year-long bear run, invest in it.
- Treasury bonds: Treasury bonds are a safe form of investment. These bonds are not 100% risk-free on paper as political instability or a massive economic crash could offset their value, but they are way safer compared to stocks of publicly limited companies.
- No mutual fund: I am going against the conventional wisdom here. The biggest problem of mutual funds is that you don’t know whether the fund will mature during a bull market or a bear market. If the fund matures during a bear market, your return could be in the negatives.
Capital market investment contains serious risks. Understand these risks before you spend any money into it.
Use reward cards
Online reward cards are a new trend. Looking at their growing popularity, many retail brands are now offering reward cards to their customers and additional points redeemable upon purchases worth a certain amount.
Since you don’t want to squander your money for obvious reasons, buy once from retail outlets and buy large. That’d help you to redeem your reward points. It’s an effective technique that a lot of people follow. Not only that saves money but makes spending strategic.
I know, I know. It’s easy to get tips but hard to follow them. The tips shared here in this article, however, are not that difficult to follow. With a little bit of practice and a little bit of patience, you can follow these tips and improve existing ways of spending money. What’s more is that you can experiment with these tips and come up with your own.