Investment Vs. Consumption

This isn’t really a budgeting tip. Actually it’s a tip on how to spend money. This post is permission to spend money, and even to spend money on things that are not on sale.

Don’t focus on not spending. Instead, focus on investing rather than consuming. An investment positions you for something downstream (keep that phrase in mind for future use too!). Consumption gratifies an immediate desire and then it’s gone with nothing to show.

My mother used to say that she couldn’t afford to buy cheap clothes. This makes perfect sense – well made clothes are an investment. Well fitted, flattering clothes will make you feel (and act) more confident. Well made clothes won’t need to be replaced as often as pieces made with shoddy manufacturing, and unlike the latest trends, a classic piece will not be passé in three months. Just remember that you are buying a few choice pieces, not opening your own shop.

Similarly, investing in things that help you get, or do a job is wise. Buying the best computer, or the best cameras I can afford positions me to work effectively downstream. It also means my equipment won’t be obsolete in a year, and working with industry standard gives me a measure of legitimacy, which helps me secure clients’ confidence.

Consumption does not leave you better off downstream. It’s that stale doughnut you bought on the way to work because you didn’t have time for breakfast: unhealthy, expensive, and unsatisfying. It’s that skirt you love the color of, but have nothing to wear with so hangs in your closet with the tags on for months.

The message is not, however, never buy a doughnut. It is simply be aware of your consumption. Stop yourself at the checkout and go through what you’re buying, mentally labeling each item as consumption or investment. Then, make a conscious choice about what you’re buying. Do this honestly and you’ll find it becomes second nature.

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