If you are then you need to know how to differentiate between what is worthy of your will-to-spend, and what isn't.
Smart spending is paying money only if you are receiving some kind of value in return. No point spending money on things that do not give you any values.
And the definition of value is quite broad, I have narrowed-down the definition of 'value' to simplify the process of identifying them: Value is what makes you happy, through the fulfillment of a need or want.
If you have what you want and have what you need, you'll be happy. If you want what you need and want what you have, you'll be happy :)
However, wants and needs may vary and they are highly subjective. What you want and need today may not be so tomorrow. And because we are humans with emotions and moods, wants can be triggered by a sudden impulse.
If these impulses take control, in the long run you’ll find that you will not be able to manage your spending. An impulse to spend is nothing more than an emotion urging you to spend. There’s absolutely nothing wrong with that, because impulses could be right.
You may have an impulse that there is something that would make you truly happy, and a few months after you’ve bought it, you found that your impulse was right after all; this thing you bought is still giving you happiness that you are truly grateful for.
But there are also wrong impulses, and after a few months of having 'this-impulse-driven-purchase' at home with you, it didn't make you feel that fantastic after all.
So the logical solution here is to UNDERSTAND your impulses (not ignore them), and you do so using rationale. One method that I love to use when it comes to measuring the things I want is using a time-horizon rationale.
Before deciding to spend money on something, ask yourself: How long will I want it for?
If you only want it for a few days or a few weeks, then very soon the happiness derived from spending money on this will simply fade, leaving you with this 'thing' that you no longer want or need, as well as no longer having the money which you had spent.
If you don’t know or if you are unsure about how long you will want it for, then it is definitely not a REAL want. It is only a REAL want if you are absolutely sure that you will still want the same thing 10 years from today.
And don’t go thinking, "but I still think I want it' because you know you don’t, so don’t spend on it.
The TRUE wants will never change, they are the REAL wants. These wants make all the difference in the world to you and these are things you will want 10, 20 and even 30 years from now.
Smart people know what they want. They don’t want what others want, and they don't want what others have. They know what makes them happy and what truly matters.
Smart spending is none other than spending money on these ‘values’ that you will ‘want’ for the ‘rest of your life’ and cutting spending on things don’t really make you happy (things that in the long run, will not matter).
And, smart spending is NOT JUST about knowing what to spend on, where to spend it on, etc. It’s also about knowing yourself; Knowing who you are and what makes you truly happy.
If you don’t know what truly makes you happy, you will never be able to practice smart spending.
"We are ruined, not by what we really want, but by what we think we do: therefore never go aboard in search of your wants. If they be real wants, they will come home in search of you; for he that buys what he does not want, will soon want what he cannot buy." -- Charles Caleb Colton
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