Spend a few hours online and you will find plenty of material providing you well-researched answers to lots of financial questions. But for all of the nuance and tax-efficiency and data mining, much of the classic personal finance advice boils down to a few basic principles: Make as much money as you can, spend as little as possible, and invest in assets that have a good chance of growing in value over time.
It's a winning formula, but it's easier said than done. That's because your finances don't happen on some money blogger's spreadsheet, but in real life, where invisible forces are seemingly pulling your dollars in a million different directions at once.
To cut out the noise, try to allocate your money to the things that will bring you the most fulfillment, says Shari Greco Reiches, a financial psychology expert and author of "Maximize Your Return on Life." "You can have anything you want — not everything," she told Grow. "If I could give one piece of advice, it would be to live within your means and spend according to your values, not society's values."
Here's how behavioral finance experts say you can spend on the things that make you happy while keeping your financial future on track.
Any major financial decision ideally satisfies a two-item checklist, according to Reiches: "'Does this financial decision align with my values? Does it align with my budget?' If you can say yes to both, you can move forward with that decision."
Determining your priorities will require some serious consideration. Reiches presents readers with a list of 100 values and asks them to narrow it down to the five most important ones.
Preston Cherry, a certified financial planner and founder of Concurrent Financial Planning in Green Bay, Wisconsin, tells clients who are just starting out to take time to map out a lifestyle for themselves. "Take a breath and journal a lifestyle in order of your highest priorities at present," he says. "You want to do this before you dream about a lifestyle, because then you find yourself in a lifestyle that you've dreamt but can't financially support."
Your "dream lifestyle" likely includes plenty of things you can't afford, and probably doesn't account for mundane financial realities such as paying down student loans or building an emergency fund. By establishing your priorities, you can safely spend on the things that bring you fulfillment without feeling that they're frivolous.
If you work within a healthy financial framework, you can safely cut out the things that aren't as important to you.
Video by Courtney Stith
Reiches recommends building your spending plan around the classic 50-30-20 method, where 50% of your income goes toward necessities, 30% to "wants," and the rest toward your financial goals such as building savings, investing for retirement, and paying down debt. From there, you can add and subtract based on your priorities.
"You'll have to adjust. If you love to cook, getting those ingredient delivery services can be expensive, so maybe you drive your car another year instead of getting a new one," she says. "Maybe you live in a city and really value safety, so you want a building with a doorman. That could add to your living expenses, so you'll have to reduce spending on your 'wants.'"
The key is to adjust within the framework rather than trying to have everything at once, Reiches says. "When you start to break the rules and you're at 110%, that extra 10% you're spending is going to debt," she says. "Society has made it very easy to buy now and pay later."
To avoid falling into that trap, experts say it's important to incentivize yourself to stay on track. That's why saving for and spending on the things you truly value can be a powerful tool, says Cherry. "Saving and spending are not mutually exclusive to success," he says. "Once you have your ducks in a row, it's OK to spend. It's OK to want nice things as long as having them doesn't define you as a person."
Rather than regarding the products or services that make you happiest as splurges, think of them as rewards for working hard and doing the boring stuff, he says. "If you're actively contributing to and planning for your goals, your reward is that you get to pay for self-care," he says. "Putting some money aside to pay for a vacation, for instance, is a short-term reward that's going to keep that person engaged over the long term."
By building rewards into your plan, you're less likely to succumb to the need to keep up with peers and make a purchase you'll regret, Cherry adds. "If you have your priorities straight, and you need transportation, you'll be encouraged to get something that fits with what your available recourses are," he says. "You're less worried about keeping up with the Joneses, and now it doesn't seem like, 'Ugh, I'm not getting a Mercedes.'"
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