The bulk of advice on getting your finances right is to reduce your spending so that you have savings that you can direct to investment and save for a rainy day. That’s great but there are certain expenses that you should never consider getting rid of in your life. You can certainly look for better deals and rationalise them but these are things you should never stop spending money on. As you will see some of these things extend beyond their effect on your finances and touch your entire life.
Insurance comes in many forms and to keep the discussion here reasonable we will not distinguish between the different types of insurance. Whether its health, life, income protection, accident, home, funeral or any other insurance you should never stop paying for these. Firstly because if you default on payments for extended periods (usually 3 months but check the contract to be sure) your contract with the insurer is automatically voided. Secondly, insurance is an essential pillar of a good financial plan. While we can have discussions about specific insurance products and whether they are worth it, we cannot dispute that insurance is essential.
Investment is not exactly spending but enough people see it that way so we will include it. Simply put if you’re not investing you’re not growing your money. Regardless of the currency, you’re keeping your money in, you will lose value to inflation, it’s just a matter of how fast it will happen. This is not to discourage savings in cash and cash equivalents but to encourage having money grow over time. There are many options available for investment, you just have to pick the right one for you. The best way to go about investing is to treat it like an expense that comes out of the top line of your income. Dedicating a percentage of your income to investments. That way you invest as often as you earn.
You cannot apply knowledge you don’t have. So no matter how much of a doer or go getter you are you simply are limited to the bounds of your knowledge. Fortunately, you can and should do something about that. You need to continuously invest in your education and the options have never been better. Whether it’s adding to your formal qualifications, taking short courses, books, financial education or additional skills education you must always have a plan that keeps expanding your knowledge and skills base. The more you know, the more you can apply and that goes for any part of your life.
Health is complicated because human bodies aren’t made to last forever. Along the way and sometimes from the onset people may be forced to deal with ailments and conditions that diminish their capacity. This is life. However we can make choices that influence, to differing degrees, how healthy we are. We can always make healthier choices, whether that is signing for exercise of some sort, buying healthier food, getting medication or supplementing our diets with vitamins and minerals we have some say in our health. Spending a little, or a lot, extra for health can pay off in the long all other things being equal.
I had so many ideas that I had to group all of these things into one category. Simplifiers are what I call all things that make your life easier. By easier I mean tangibly changing the way you use your time or the general quality of your life. For example, a washing machine saves you a lot of time and improves your ability to stay on top of the laundry. So if you are able spending money on something like that can change your life. That extra time can make you more productive. It’s not only time, some simplifiers give you more options. A simple microwave can give a busy person the option of preparing food in advance and refrigerating it, then reheating it to eat instead of cooking every day. This means eating healthy can become much easier. Simplifiers objectively improve lives and they are always worth it.
These five areas may not pay off immediately but in 5 or 10 years you will look back and appreciate the difference they have made in your life. So never stop spending on these things.