Money matters

My philosophy when it comes to money is simple: either earn considerably more than what you spend, or spend considerably less than what you earn. I never drop a large amount of money without having at least three times of it squirrelled away in my savings account. I only think I can "afford" something not when I can pay for it right now, but when the amount doesn't cause me to worry about my bills for, say, the next three months.

I'm a huge believer in emergency funds. I always have three or more months worth of living expenses stashed in my account and this I never touch. As a freelancer, it's extremely important to have a reserve when clients are slow in paying or when I can't find any presently. I've had major windfalls but I've also had periods when I am close to dipping into my emergency fund. That's just how it is, and I've learned to expect the ebb and flow of cash.

I like buying nice expensive things, but I also know the difference between an investment and luho (unnecessary luxury). I've learned that a designer bag is not an investment because its resale value is typically lower than the retail price,  i.e., you don't actually earn anything back from it (unless you make it a business). I also personally don't get that much joy in carrying one as I dislike having to fuss over a bag.

I'm not saying that those who love luxury bags should not - I'm just saying I don't. Different things give different people joy. It's useful not to delude yourself into buying something thinking it's an "investment" when it's really just because the item gives you joy. There's nothing wrong with that as long as you've got the cash for it and you can call it as it is. It's your money, after all. Just know that you're in trouble the moment you try to justify it as an investment, therefore going past your means to afford it. That never ends well.

I love to travel and I love buying high-end art materials. I know these aren't investments - gosh, far from it - but I derive joy from spending on these things. I am a little overdue for a new MacBook though and this I consider an investment. It will increase my productivity, streamline my work, thus paying for itself and much more. That's probably my next big spend after my trips this year.

I have very little credit card debt. I only use my credit card for Uber rides and payments for online services. I also don't typically borrow money even from my parents. Like I said above, if I can't afford it, then I won't go beyond what I'm capable just to pay for it. It can always wait.

I feel that my attitude towards money is fairly good, as I'm pretty happy with my savings and checking account. I do have weaknesses though. I am aware that I need to invest my money into mutual funds and/or a business, as well as pre-need systems. I am giving myself six months to work towards these things.  

How about you, what is your philosophy when it comes to money?