Few people are good at spending money, 80% are bad at it.
Why are most people bad at spending money?
Why are some people good at spending money and others not so good?
I'm going to write about it in detail.
If you were good with money in the first place, you'd be rich!
The majority of people don't know how to spend money well, so they don't become rich.
And it's not because they waste money that they are bad with money, or because they spend money systematically that they are good with money.
I'm not going to write such a shallow story here.
A person who spends money well is a person who spends money in a way that will make them rich in a few years.
It's not just that they don't waste money or buy things cheaply, but that they can manage their money properly.
And if you can use your money well, you will be rich.
Types of money use
There are three types of money use.
Consumption
Spending
Investment
A good balance between these three types of spending is a good way to spend your money.
Let's talk about each of them.
Consumption
Consumption is the money you spend on the things you need to live.
For example, food, clothes, electricity, water, gas.
For example, food, clothes, electricity, water, gas, and even mobile phone bills are included in consumption.
Clothes are both consumption and waste, but it's a very subtle thing.
Waste
Wasteful spending, such as going out, buying trendy clothes or bags.
Buying games or paying for social games is also wasteful spending.
Cigarettes, alcohol and sweets are also considered wasteful spending.
It's easy to waste money unconsciously, and it's not uncommon to find that you've fulfilled your own desires.
It's important to be aware of and control your spending.
Don't spend more than a certain amount of money.
Before you buy something, think about whether you need it or not.
It is very important to make a decision calmly.
Investment
Investing is buying things that will generate money for you in the future.
For example, stocks and real estate are easy to understand.
There are many types of financial products such as domestic stocks, foreign stocks, domestic bonds, foreign bonds, emerging market stocks, emerging market bonds, precious metals, real estate, etc.
There are many.
In addition, studying for qualifications to start a business or buying things for a second job are also investments.
Renting out a car, renting a parking space, renting a room, etc. are also investments.
In any case, buying things that will make you money in a month, a year or even years from now is an investment.
Decide how much money you want to spend
Decide how much of your monthly money you want to spend on consumption, waste, investment and savings.
Decide how much of your money you want to spend each month.
That way you won't be afraid to waste money.
For example, spend 60% of your money on consumption, 10% on waste, 20% on investment and the rest on savings.
Don't shop on the cheap
It is not wise to spend money on cheap products.
It's fine if it's something you'll consume quickly, like food.
Spend money on things that you intend to use for a long time.
A product that is well made is naturally expensive.
Instead of buying a product that is expensive but will break soon, buy a product that will last for 5 to 10 years.
If your phone case is so fragile that you have to replace it 30 times in 2 years, even if it costs 100 yen, you should buy a phone case that will last for 5 to 10 years.
It's better to buy an unbreakable 3000 yen phone case from the start.
It is more reasonable to use a slightly expensive product for a long time than to buy a cheap one.
There's also the hassle of going to the shops.
80% of Japanese people spend their money only on waste and consumption.
For example, if you won 300 million yen in the lottery, what would you spend it on?
What a stupid story, isn't it?
What would you spend it on? Have you thought about it?
Have you thought about what you would buy?
Have you thought about investing? If you have the idea of investing, you have the talent to spend money.
If you spend most of your money on consumption and waste, then you are not a good spender.
If you are not good at spending money, it is because you do not have money left over to invest.
There is a way to save money, but saving money is dead money, not living money.
Living money is money that has been used and is working.
It's better to invest when you're young
Saving in your 20s is not a good way to prepare for retirement
It is a delusion that if you start saving when you are young, you will have a secure future.
That's because it's better to invest your money to increase your income than to save it when you're young.
Saving is the act of saving a percentage of the income you earn.
But for young people in their twenties who are just starting to work, the amount of money they can save is small.
For example, if you save 10% of your monthly salary of 200,000 yen, you can only save 20,000 yen.
But if you save 10% from 200,000 yen a month, you can save 200,000 yen.
After all, you can only save from your own earnings, so you should invest when you are young.
Japanese people hate investment.
Many Japanese people think that working hard is a virtue.
It is right and justifiable, but on the other hand, they hate unearned income by investment.
Working yourself is not the only way to work, but it's also a way to let money and assets (things that produce money) work for you.
The explanation of this is complicated, but for example
Mr. A buys juice from a vending machine, which is placed in a main street in the city. He asks the supplier to replace the juice.
Mr. A can make his own money from the sales, except for the money he pays to the juice supplier.
This is unearned income. Is this a bad thing?
I think Japanese people are too disgusted with the idea that something they own can earn money for them.
I think the reason why saving is encouraged is because the habits of the bubble economy still exist.
There is a culture that encourages saving, but savings in the bubble period had a yield as high as investments today.
The current interest rate on deposits is about 0.001%, while the interest rate during the bubble was over 5%.
If the interest rate was 5%, it would be a gamble to invest, and it would be more profitable to make a deposit in a bank.
Is investing gambling?
Is investing gambling? The answer is yes and no.
Because in the case of Forex, tens of millions of yen can be lost!
However, gambling and investment are completely different, because in the case of gambling
In the case of gambling, it is always the organiser who makes the money.
In other words, it is a negative sum game.
In investment, no one always wins, and even if you lose, you can often get your money back.
With stocks, you can cut your losses and it's a zero-sum game.
There are ways to increase sales, such as dividends, interest, rental fees, etc.
It's very different from gambling in that you can always win if you prepare properly.
Gambling or investment: predicting the future is the same for both investment and gambling, but it depends on how far ahead you are.
It is difficult to predict 10 seconds ahead, no one knows if it will rain in 10 seconds.
But anyone can predict if there will be a typhoon in six months.
You don't have to give the exact date and time, and you can make money with a rough prediction.
Finding the right balance between saving and investing
It's important to have a certain amount of cash in your pocket.
You can't save too much, but you can't save too little either.
In the case of a company, it's best to always have three months' worth of sales saved up.
If you're an individual, it's probably a good idea to always have a month's salary saved up.
The average salaried worker can save that much in a year.
It's better to save between one and three months' salary for emergencies.
Buy assets to reduce your liabilities
Buying assets is a good way to deal with money.
Liabilities are things that you need to pay for just to have them.
You can make better use of your money by reducing your liabilities or increasing your assets as much as possible.
If you need to reduce your monthly fixed costs to suit your lifestyle, you should do so.
If you have more liabilities, you will be poorer no matter how much income you have.
This is because your monthly fixed costs are putting pressure on your living expenses.
Conclusion
A person who is good with money has a good balance between consumption, waste and investment.
It is a person who can spend money is a good use of money.
Most of us are not very good at using money.
It's partly because we don't study it.
We should spend our money in a way that reduces our liabilities and increases our assets as much as possible.
Thank you for reading to the end.
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See you soon!
Translated with www.DeepL.com/Translator (free version)