There are three kinds of people in this world: excessive spenders, misers, and people who know how to balance their spending. And you don’t want to fall in the first two categories.
An excessive spender is a person who makes extravagant expenses, such as luxury watches, expensive dinners or entertainment expenses, even if he is not rich enough to afford all these. He spends money as soon as he has saved up enough for his next purchase.
The miser on the other hand, is a serious saver, who would only shop from discount stores and would try to pinch pennies in every expense. Such a person would go to the extent of refraining from attending important social gatherings in order to save on the gift expense.
You should not be at either of these extremes. If you spend too much, you would never be able to build up enough savings to secure your financial future. This could lead you to disaster. For example, if you face an emergency, you’ll have to resort to high interest debts to pay for the expense, as you wouldn’t have any funds to resort to.
On the other hand, if you only keep saving, you would never be able to enjoy your life. After all, the whole point of earning money is to spend it on things that you need. Otherwise, your bank balance will just be a meaningless number.
Try to strike a balance between these two approaches. Before making an expense, you should consider whether you really need that product, and if you do, then don’t be afraid of spending on it. In fact, there is nothing wrong even in indulging in a bit of harmless overspending once in a while. Eating out at a good restaurant or travelling to a nice destination once in a while is a perfectly valid expense and it will also make you feel good about yourself.
Another thing you can do to manage your expenses without risking your financial future is to make it a habit to invest a percentage of your income into a second account like a certificate of deposit, which is not easily accessible and does not have a debit card. This will help you maintain financial discipline and you will have a very clear idea of how much you can afford to spend. Avoid using credit cards unless it is absolutely necessary, so that your expenditure stays well within your means.