Irrational Spending: Why Should We Look To Our Finances More Seriously?
Even though Finances are one of the hottest topics in the world, the inability to manage money is one of the most underestimated human dilemmas. Humanity misuses the power of money and loses its advantages for temporary satisfaction.
Pop culture and the trend of consumerism are influencing buyers on spontaneous spending and triggering people to buy things we never use. Provoke viewers to donate for the random entertainers offering no added value—that kind of decisions twisting in our minds and makes us look silly. We need structure, we need discipline, and we need to teach ourselves how to manage our funds.
Benjamin Franklin once said, “Money makes money. And the Money that Money makes, makes money”. Two assumptions can be seen in this quote. One is that if you let your money work, they will earn you a profit which reinvested will grow even more. But we should raise another question as well, what happens if money does not make money?
Managing funds is hard to do, and not doing it correctly leads to a lot of problems. Today’s culture dictates you to have the newest smartphone, expensive clothes, latest cars, and other things. That leads people chasing the trends meaning spending money irrationally on things that will be out of date in a few months. As a result, we have an average American with €33,5k in personal debt, and 29% of American households have less than €1k in savings. According to Northwestern Mutual Planning & Progress Study 2018, 2 in 10 Americans spend 50-100% of their monthly income on debt repayment.
To our surprise, people still find a way to waste their money, for example, on donations for video game streamers or in-game purchases. Just imagine that the top ten Twitch streamers make more than €17.5 million a year! Streamer Ninja earns more than €3.5 mln. from subscriptions and donations. Or a game Fortnite which by the way is free generated more than €250 mln. in revenue in one month.
We must look at our finances more seriously because if we won’t, our future generations will be born with a negative balance in their bank accounts.
Do not try to solve the global spending crisis and start from yourself. Try to split your monthly assets into three parts:
This will help you to track your expenses and manage it properly by cutting out unnecessary spending habits.
Needs include all the money that is spent on necessary bills and the things that are essential for living. For example, rent or mortgage, car, food, utilities, insurance, etc. By identifying what is vital, you will be able to see where money is wasted. For example, food is essential for survival, but do we ever wonder how much money we lose on unnecessary products? Research carried by Safefood showed that in Ireland, families spend more money on treats than vegetables. That indicates that there are expenses that could be reduced.
Wants shows the expenses that are not that essential but necessary for your entertainment. For example, eating out, watching movies at the cinema, a new phone, or any other high-tech gadget. Wants expenses are at its peak at the moment. As consumerism runs our community, more and more money is spent irrationally and impulsive. It is believed that around €4,8k a year is spent on impulsive purchases. €400 in a month! Not to mention all the expenses on entertainment and new iPhones. By tracking and reducing the needs expenses, you will have extra money, which could be used for better purposes.
Savings should take part in your financial life as well. Have you ever wondered what would happen if you save €5 every day? That would cut your morning coffee with the croissant. You would save around €150 a month and about €1,825 in one year. Well, it may sound not that much, but we must remember that money should make money. That is why investment is an essential part of your financial life. A very conservative investment earns about a 4% return on investment (ROI) annually, which would grow your little savings to €135,000 in 35 years. Well, that sounds great! It gets even better when you choose to invest your money with alternative investment companies. They are like Revolut in banking, just in the investment field.
While alternative investing is a bit riskier than conservative investing, it can bring you a higher return on investment. For example, the FAST INVEST alternative investment platform offers a 9% to 18% annual interest rate. If you invested €150 each month with a 10% ROI, it would grow to €561k in 35 years! You can also find fictional persona Ollie, which illustrates how you can raise your money from a smaller sum to a much bulkier one in 5 years.
As we see, there is an antidote to the financial madness; we need to be aware of what’s happening. We must track our expenses to see the flaws in our spending habits, remember: needs, wants, and savings. And never leave your money in the bank account because money needs to make money. FAST INVEST can help you with that; by starting investing now, you can make a significant impact on your future and the generation to come.