If you’re a middle-class American then you probably work really hard for your money, and even after that hard work you likely still have a tight budget to live off of. That’s the American way. And look, if you have a massive amount of debt then really spending money isn’t something you should be doing much of anyways, right?

But the honest truth is that we WILL spend money, it’s just inevitable. So stop pretending you won’t, and just be smarter with how you spend your money. What exactly do I mean?

I mean that we need to plan ahead with the things we are going to spend money on and prioritize them. Before we get into this, however, I need to let you know a couple of things. Those things are 1. I’m not a financial advisor and 2. this isn’t financial advice. This is only my financial opinion. That being said.

How to Spend Money Wisely

First off, you keep a budget right? I mean I’m talking about a budget where you plan months ahead for your bills. Ok, great. Well if you have that done already then you can go ahead and get smart about your spending (seriously create a budget first).

But when it comes to spending, just like with a budget and planning ahead on your month by month bills, we should be doing the same thing with the large purchases or household items we want to buy.

And I don’t know about you, but I have a long list of things I want to buy (does any homeowner not). Seriously, the second I buy one thing I have another thing I want to add. Whether that’s a new fence, new carpeting, a new furnace, or something fun like a new basketball hoop. It just never ends.

Before you go judging me though, I know that pretty much every other person I know is the same way, so unless you’re some kind of holier than thou Buddhist monk or something, you’re probably in the same boat. So, let’s go over a few key concepts that you can follow to ensure you are spending your money wisely.

Make a List of Everything You Want to Buy

You could use a lower price point but for the most part, I’m referring to things that cost hundreds or thousands of dollars. These are the things you need to be smart about spending money on. Yes, of course, you shouldn’t be wasting money on the small things as well, but that’s not going to make or break you. That’s a whole other article of habits that you can change. Don’t worry I’ll get you covered there as well, but for now, focus on big expenses.

Prioritize Each Item by Need/Price/Value/etc.

When I first started doing this I put down the price of each item or the time it would take me if I personally did the job myself. This way you know exactly how much you’re going to be spending.

But, I noticed some of the things on my list were a lot more necessary than others. Some were strictly just wants, but most of them were things that were “needed” like new gutters or things like that.

Basically you’ll want to prioritize things by need and of course if you’re even able to afford it. So, something of the same need that is much cheaper than another need would likely be next up on the list.

Once you have all of this stuff written down you know exactly what to expect. If you have clear parameters on what you need to buy then you’re far less likely to go out and take out a ton of debt on something you don’t really need.

Focus on Building Your Net Worth

This really is one of the most important aspects you need to consider when making large purchases. Are you increasing your net worth or decreasing your net worth? To be completely honest, most people don’t consider this at all when making purchases. They simply look at the dollar amount on something they want and see if they are able to buy, and if so they pull the trigger.

Now, this really isn’t a good idea if you’re wanting to put yourself in a better financial position. This type of thinking is what gets people in a lot of debt. Once I started understanding what net worth really is I started making better financial decisions.

This is absolutely crucial if you want to spend money wisely, otherwise, you’re likely to spend a lot of money on things you don’t need. Make it a priority to buy something at its actual value and make sure it won’t depreciate in value quickly. This cannot be stressed enough!

Have Discipline/Don’t Buy Things You Don’t Need!

Does it make any sense whatsoever to go out and buy things you don’t need when you’re in debt? I mean think about. You owe other people/banks thousands-if not tens of thousands-if not hundreds of thousands of dollars…does it sound like a good idea to go out and buy shiny objects when you’re already in massive debt? You’re living in fantasy land if you think the answer here is yes.

Now, don’t get me wrong, we all are going to make some of these purchases. I mean you don’t want to live completely miserable or anything, but at the same time, unless you want to be a debt slave for the rest of your life then you may want to have some discipline here.

Do you like working? Most people complain about their jobs but then make financial decisions that force them to have to work more. It doesn’t make any sense.

Look, if you don’t have any debt then go ahead and make these “fun purchases”, just pay cash. That should be the rule. Don’t take on more debt if you don’t have to. Simple.

This alone may cut off half of your list. Is this upsetting? The way I see it is you have no business buying things you don’t need when you already owe other people a shit ton of money.

Summary

Hopefully, this gives you some good ideas on how to spend your money wisely. Some of it may not be things you want to hear but may be things you need to hear. Cut out the BS spending and prioritize the things you need vs. the things you want. Once you start doing this you’ll thank your former self down the line. I assure you of this.

What do you think? Do you currently write down a list of things you are planning on buying? Do you consider how it will affect your net worth when you make purchases? Or are these things you haven’t been doing at all that you may start doing? Let me know in the comments below!