When I was working to get out of debt after college I focused entirely on how to be more frugal. I wanted to save money as fast as possible. I thought that the best way to do so was by focusing on my spending and I completely ignored the earning portion of the equation. What took me a long time to realize was that sometimes you have to spend money to make money. If I would have invested more time, energy and money into developing income streams other than my desk job, I may have been able to get out of debt sooner. Instead, I ate cheap dinners, limited entertainment spending and avoided purchases I really wanted to make. I scrimped and saved until I had enough to pay off my debt.
When someone is faced with a large amount of debt, they tend to get tunnel vision. They may think, like I did, that the best way to save up money to pay off the debt is by minimizing spending. They cut back on amenities, use coupons, and reuse plastic baggies. These are all tactics you can use to reach your goals, but the alternative solution is to earn more.
Earning just $1 outside of your main job can be harder than just avoiding the spending of that same $1, but learning how to earn money on your own can provide more freedom for your life and open up options for your future.
Reluctance to an Initial Investment
The hesitation is often that you have to spend money to make money. Without the initial investment of money, it can be hard to get side income going. When you have to invest money that you should be putting towards your debts it can be easy to give up. You know you don’t have the extra money to spend so you quit before you even get started on a side project. Just remember, sometimes you need to spend money to make money.
(Don’t just take this as an excuse to go further in debt and buy things you don’t need, though. Make a fully educated decision on whether the money you are spending will actually lead to income.)
Examples of How Spending Money Helps You Make Money
Go to College: College graduates earn (on average) twice as much as high school graduates over their lifetimes. Graduate degrees increase earning potential beyond undergraduates and so on.
Buy Beginner Equipment: You can start to learn photography, music, computer, or art skills with an initial investment in the appropriate equipment. Once you spend money on the initial gear, learning then comes mainly from time and effort.
Build Infrastructure: Buying inventory of your product is necessary to make sales. Having a professional design done for your business’s website can help your brand and get more traffic to your website.
Invest in Your Future: By investing your money for retirement now, you will (theoretically) have more money later. In essence, you are “spending” it now because you can’t spend it on anything else, but you get to actually spend it for real later.
Treat Your Clients Like Friends: A simple gesture of sending a thank you card or buying a client a coffee at a meeting will demonstrate to them how much they mean to you and your company. Build a relationship with small investments and you will see large dividends in the long run.
Like I said before, you can’t just spend money on whatever you want and expect to get income. Have a plan for what you invest in and spend your money on.
Invest in possessions and you will go further into debt.
Invest in yourself and you may be surprised at how financially successful you can be.