Budgeting often goes hand-in-hand with saving, and that's a good thing. Spending more than you earn is a surefire road to financial distress, and building up savings a surefire way to avoid it. But there are limits: Penny-wise is great until it becomes pound-foolish.
Here's how to tiptoe up to the line without crossing it.
Cover the basics
There are certain costs one just has to realize in life. Dentist visits, basic nutrition, and operational plumbing are probably the kinds of things you don't want to skip out on. Let me rephrase that: You might want to skip them, but you shouldn't. No one wins if you're avoiding the dentist only to get a root canal later, or if that stubborn leak in the bathroom turns into a wall caving in.
I like to think of these expenses as investing in maintenance. Annoying costs like oil changes mean less money for things we prefer, like long lunches and cocktails, but they're important and help you offset even greater future expenses. So, if it's going to help prevent decay or help you maintain your stuff, spend the money.
Invest in quality
Sometimes, the things that appear cheap on the surface are actually a lot more expensive in practice.
Penny-pinching becomes self-defeating when you buy a particular car just because it's the lowest price, or an armful clothes just because they're in a discount bin. Yes, you may have gotten more on the surface, but are you really better off? The cheap car might need some expensive maintenance, and those cheap clothes could fall apart and end up in the trash -- or still worse, taking up space in the back of your closet.
So, if you're going to buy something, hold out and invest in quality. It doesn't have to be the top of the line, but it might as well be something that can last longer than a few blocks or a few wears.
While this advice applies quite easily to your classic durable goods, like cars and appliances, I'd argue you can apply it nearly anywhere. Clothes for work, furniture, leather goods -- you can buy all of them for a song these days, but that won't get you very far if you just have to go shopping again in three months. Save up the money, make a good purchase, and don't worry about it again for years.
Prioritize everything else
As mentioned, investing in quality doesn't mean you have to buy a $2,000 handbag or a state-of-the-art microphone for your karaoke machine. Unless, of course, your driving passion in life is handbags and/or karaoke. In this case, you might want to prioritize the expenses that make you really happy. Splash out a bit in one or two areas so you can cut ruthlessly on everything else.
This will make your budget more sustainable and more life-affirming. Yes, you could just go extreme and cut across the board in order to save more, but will it really make you happier if it means no top-notch karaoke recordings for another 20 years?
Make room for the few things you love so you can feel the true power of a solid financial plan: sustainability and the power to live your life the way you want to.
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