How to Manage Money Better without Sacrificing Joy

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Key Takeaways:
  • Budgeting lets you spend more on what's important to you.
  • Squeeze as much joy as you can from every dollar.
  • It's okay to prefer experiences to things.

Suze Orman says that you shouldn’t waste money on things like coffee. She tells CNBC: “I wouldn’t buy a cup of coffee anywhere, ever—and I can afford it—because I would not insult myself by wasting money that way.” Her reasoning: coffee is a “want” and not a “need”—and that money can be put to better use, like being invested. But is this really helpful advice on how to manage money better?

You might save money by cutting out small purchases you don’t really need. Another way to view life is that it’s important to do things that make you happy—even if that means buying a cup of coffee at your favorite café every once in a while. In other words, balance is key to a well-rounded life.

Feeling bad about every purchase you make probably isn’t a healthy way to live your life. Instead, focus on creating healthy spending habits that promote balance in your life. Spend money on what makes you happy while being mindful about how much you spend and how often. If you’re struggling to find this balance, you can use these tips to help manage your money better without getting rid of those occasional indulgences that make you happy.

Get the most for each purchase

You don’t have to stop spending altogether to be money smart. Instead, you need to make intentional decisions about where you’re spending and ensure that you’re getting the most for each dollar that comes out of your bank account. Here are a few simple ways to do exactly that:

  • If you love coffee, go to a café with a rewards program.

  • If you love to stream entertainment, choose just one service and cut the rest.

  • If you love to shop, and you use credit cards, choose one that offers rewards and points that you can redeem for travel or cash back.

Consider each dollar spent as an investment

Learning how to manage money better includes the realization that everything you buy is really an investment. Before making a purchase, ask yourself: is this a good investment or a bad investment? Making a monthly budget will help you determine whether something is a good investment relative to your income and debt.

When it comes to clothes, home goods and electronics, this is straightforward. In general, the longer you can get use or value out of something you buy, the better. A trendy shirt that rips the third time you wear it, for example, is probably not a good investment. It comes down to overall value and cost of ownership, with the realization that sometimes the item with the absolute best value is out of our budget range.

But when it comes to coffee, wine, and nights out, you can evaluate the investment in terms of the experience. It may be worth spending $50 on a gift for your best friend’s birthday, but spending $50 on happy hour drinks with your boyfriend’s co-workers may not provide the same experience that enriches your life and makes you happy.

Take it from the experts

Sometimes the best money advice comes from the people who are working to find their own balance and happiness. Here are some real-life tips on how to manage money better while still living a rich life.

Reward yourself with the things you love

Justine Nelson, founder of Debt Free Millennials, loves to travel and often shares insights about how she uses travel as a reward for herself when she reaches debt milestones.

“I always make room for travel even when I was paying off $35,000 in student loan debt. Why? Because travel is my happy place. Because it’s important that I experience life now and not later. Because debt milestones should be celebrated with adventure,” she says.

Using this money management technique, you spend money on something you love, while rewarding yourself for working hard.

“Love to try new restaurants? Build in a restaurant outing when you pay off your first loan. Love to attend baseball games? Hit your savings goal and then see a game. The reward is much more satisfying and you’ll have motivation to continue towards that #debtfreelife,” Nelson explains.

Rent, don’t buy

In our consumer-driven world, it’s easy to jump into buying something right away when you want it. However, The Budget Blonde suggests considering renting instead.

“I would really like to own a kayak, but the max I’d go a month is probably once. Is it worth it for me to pay for an expensive car rack and a kayak? Plus figure out how to store it at my apartment?” she asks. “No, I’ll pay the $12 and rent the kayak.”

The good news is that you can rent so many items in our ever-connected world, from expensive event dresses to camping gear and electronic accessories. If you won’t use it often, or never again, enjoy the moment and spend less by renting. However, an important part of learning how to manage money better through renting is to actually do the math to ensure that buying it isn’t actually a better investment.

Create your fun money account

In your monthly budget, account for the things that bring you joy, as you do for your cable bill or your car insurance. Sara, of Save With Sara, says she would fail without her fun budget.

“Budgeting fun money keeps me from feeling deprived. If I didn’t have it I probably would become resentful of the process and give up, or I would break down and do something over the top and expensive,” she says.

Set money aside each month for fun (to spend during summer vacation, Christmas, whatever) so you can enjoy your fun without guilt and without going overboard.

It’s possible to spend consciously while also enjoying the things you love. The key is balance and visibility into your finances. Set a fun money budget, get more for each dollar you spend, and consider whether the experience is worth the money. By adopting these money managing tips and celebrating your financial success, you’ll be more likely to stick to these financial habits and have a healthier relationship with money,

Manage your finances and find balance in your life

Learning how to manage money better, deal with debt and plan a bright future doesn’t need to be hard. Our simple-to-follow guide will help you find the tools you need to create a better financial future for yourself. Get started today by downloading our free guide.