And it didn’t make sense to me the first time I heard it either.
I read about this concept in Vicki Robin’s book, Your Money or Your Life.
It’s become a popular concept in the Financial Independence community as well.
And by following this principle, it can really generate a lot of extra income.
The principle goes like this:
Spend more money on what you love and spend very little on everything else.
The truth is, if you made a list of the top 10 things that you really enjoy, you’ll find you’re spending money on a lot of things not on that list. Why are you doing that? :)
Often, when we start budgeting, we try to cut back on everything, including what we enjoy. That usually doesn’t last long & we give up on the budget. It’s because we feel like it’s robbing us of happiness.
The truth is, it’s much easier to stick with a budget that encourages you to spend more money on what you enjoy and cut back in areas you don’t care about much anyways.
So many items in our budget are there because they’ve always been there or because everyone else has them in their budget. Sure, but that doesn’t mean those things need to remain in your budget, especially if you can tell they aren’t contributing much to your daily enjoyment.
Let me give some examples.
My wife loves coffee. It’s something that makes her so happy each morning.
I constantly tell her, let’s spend more money on coffee. Let’s get the best coffee maker we can find. Let’s get you the best coffee beans. Whatever would make that experience even more enjoyable, let’s get it.
Then, let’s look at what else we’re spending money on each month that doesn’t bring you the same degree of happiness & let’s cut it. And that’s what we did. You wouldn’t believe how much you can cut when you increase the things you really like.
Another example.
A few years ago we moved into a house that had a hot tub pad built into the patio. We'd never really used a hot tub much before. But since the house was built for one, we thought maybe we should try it out. We got a cheap, old, used hot tub just to see if we’d even like it.
Needless to say, we loved it. We used it almost every day and we enjoyed it so much. My wife and I like to run each day & there’s nothing like sitting in a hot tub after a long run and letting the jets soothe your sore muscles.
We used that hot tub for a few years & then moved to another house. This new house wasn’t set-up for a hot tub, so we knew we’d have to spend some money getting a tub & running the electricity.
I thought about getting another used tub but my wife and I both agreed that we enjoyed it so much, it’d be worth getting a brand spanking new tub with all the warranties & bells & whistles (it really only ended up being a couple thousand more than we paid for the used tub because we got a smaller one). Then we’d make big cuts in the budget for other things that didn’t bring us as much enjoyment as the hot tub.
Spending more on coffee & on a hot tub has saved us so much money.
Crazy, right?
Because we’ve gotten intentional with our finances & optimized the things that bring enjoyment & cut everything else.
I never would’ve believed that spending more money on certain items would end up saving us a lot more money than we were actually spending. But now I have first-hand experience.
And when you reduce your monthly budget in ways that don’t sacrifice the things you enjoy, you can stick to it longer.
That can put significant extra income back in your pocket each month.
