Search for Savings & Loans
5 Principles of Spending You Need to Follow
5 Principles of Spending You Need to Follow
See The Best Loans Available in Kenya Today
Money Management

5 Principles of Spending You Need to Follow

Washika Shiundu
January 23, 2023

If you're tired of feeling anxious about your finances and unsure where all your money is going, it may be time to start being more mindful of your spending habits.

Being mindful of your spending means taking control of your financial decisions. It ensures you use your money in a way that aligns with your financial goals. 

In this article, we'll explore five principles of spending money to help you make smart decisions. 

Let’s dive right in.

1. Spend Less Than You Make 

When you spend less, you can build up savings rather than fall into a debt cycle. It means you should create a budget and keep track of all your expenses so that the amount of money going out does not exceed your income.

Some budgeting techniques you can try include:

  • The 50/30/20 rule: This budgeting technique allows you to allocate your income in a way that prioritises savings and debt repayment while still allowing for some flexibility in your spending. Here’s how to use it,  allocate 50% of your income towards necessities, 30% towards personal and lifestyle expenses, and 20% towards savings and debt repayment. 
  • The envelope method: It involves setting aside cash for specific expenses, such as groceries or entertainment, and placing it in labeled envelopes. Once the money in the envelope is spent, you can’t spend more in that category until the next budget period.
  • The zero-based budget: This budgeting technique involves allocating every penny of your income to a specific category, whether it be expenses, savings, or debt repayment. 

Other than budgeting to cut back on your expenditures, you can also:

  1. Track your spending: This will help you see where your money is going. 
  2. Cut back unnecessary expenses: Look for ways to save money on expenses that aren't essential, such as dining out or subscription services.
  3. Increase your sources of income: Consider taking on a part-time job or starting a side hustle to bring in extra money.
  4. Create an emergency fund: A rainy day fund will help you cover unexpected costs such as medical bills, funeral expenses, or loss of an income stream.

That said, spending less than you make doesn’t mean depriving yourself. Instead, think of ways you can reduce unnecessary purchases and save more money to achieve your financial goals faster.

Read Also: The Ultimate Personal Budgeting Guide.

2. If You Can’t Pay For It in cash, Don’t Buy it

The idea is simple, if there isn't enough money in your bank account or on hand to cover the expense, don't buy it! Instead, save to buy later or invest.

Here’s why. If you take out a loan or use credit to buy something, you’ll have to pay back the money you borrowed plus interest. You’ll end up paying more for the item.

Besides, if you follow this rule, you’ll live within your means and won’t end up overburdened with debt from taking out loans.

That said, there are some situations where it may be necessary to use credit, such as when you need to make a large purchase that you can't pay for upfront or when you need to cover an emergency expense.

Read Also: How to Use the Cash Only Budget.

3. Money Can’t Buy Happiness

It’s true that having financial security removes some of life’s stressors, but don’t confuse having money with being happy since wealth isn't necessarily a source of contentment or satisfaction. 

Happiness comes from within. 

So, how can you pursue happiness?

  • Have meaningful relationships by keeping your boundaries,  accepting criticism, and having healthy and honest conversations.
  • Investing in experiences such as hiking, traveling, and camping
  • Adopt self-care practices like eating healthy, reading books, and working out. 
  • Give back to society by volunteering, planting trees, or helping a child in need.

Read Also: Money and Me: 5 Spending Principles That Bought Me Happiness

4. Don’t Spend It Before You Earn It

Spending money before you earn it is known as "living beyond your means". When you spend money you haven't yet earned, you are borrowing money that you will have to pay back later, often with interest. 

This can lead to financial instability and even debt.

Another reason to avoid spending money before you earn it is that it can prevent you from achieving your financial goals. 

If you are constantly spending more than you earn, you will have little money left over to save or invest. It can make it challenging to build a nest egg for retirement, big purchases, or emergencies.

Additionally, living beyond your means can also lead to emotional and mental stress, as you may feel a constant weight on your shoulders of financial insecurity. This can affect not only your overall well-being but also your personal and professional life.

In conclusion, spending money before you earn is risky financial behavior that can lead to debt, financial stress, and difficulty achieving your financial goals. 

Also Read: How to Budget & Save A Lot of Money As An Employee In Kenya.

5. Invest Time Before Investing Money

By researching and understanding different investment strategies, you can ensure that you’re making informed decisions with your money rather than relying on luck or impulse buying. 

Besides, if you invest in time before investing, you’ll better understand what works best for your situation, enabling you to maximise returns while minimising risk.

Here’s how you can invest your time before investing:

  • Research investments: Take the time to learn about different investment options and the risks involved.
  • Set financial goals: Think about what you want to achieve with your investments. Do you want to save for retirement, generate income, or build wealth?
  • Seek guidance from financial advisors: Professional advisors can provide valuable insight into potential opportunities.
  • Build an emergency fund: Building an emergency fund can help you whether financial storms.

Read Also: 9 Money Rules You Should Live By.

Wrapping Up

In conclusion, being mindful of your finances is a wise decision that can save you from stress and financial struggles. 

Simple measures such as spending less than you make, not buying something if you can't pay for it in cash, and investing time before investing money can go a long way, don’t buy if you can’t afford cash, 

No items found.

Washika is a seasoned SEO content writer and copywriter with proven experience in creating unique, insightful and engaging content for a wide range of audiences that ranks high on search engines. Learn more about his work by visiting his LinkedIn profile.

Download the new Money254 App and don’t miss out on the next article.

Join 1.5M Kenyans using Money254 to find better loans, savings accounts, and money tips today.
Get it on Google Play

Learn more about Personal Loans available in Kenya on Money254

Money 254 is a new platform focused on helping you make more out of the money you have. We've created a simple, fast and secure way to find and compare financial products that best match your needs. All of the information shown is from products available at established financial institutions that our team of experts has tirelessly collected.

Instantly search loan products from established providers in Kenya and compare on the terms that matter most to you.
Find the best Personal Loans for me

Don't miss another article - download the new Money254 App Today

Get it on Google Play

Sign up for our newsletter and get weekly money tips to your inbox.

Get updates from the Money254 team on financial news and new Money254 features.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.