One of my favorite sayings is “You gotta spend money to make money.” I don’t know why I like it so much considering it’s not always the case, but I guess the times when it is I just really REALLY love it :) Like, say, contributing to your company’s 401(k) plan. You “spend” a percentage of your paycheck every two weeks to better your future, and then your company turns around and dumps in FREE money to match! How awesome (and easy) is that? Spending money to make money at its finest.
Unfortunately, however, life isn’t always so clear cut so we do the best we can and hope we’re taking advantage of the opportunities as they’re passing us by. And things like emotions or personal barriers only muddle stuff even more (for the good, or the bad). Last night was a perfect example of this.
Here’s how a discussion between my beautiful wife and I went down last night. With her permission to share it, of course – I don’t want to share the couch!
“Hey honey, don’t be mad at me: I spent an extra $100 at Target tonight” – my wife spouted, with her cringe face on.
“Well, what did you end up buying? I’ll tell you if I’m mad after hearing that!” – I jokingly respond back ;) Knowing full well she didn’t waste any money because she’s (fortunately) not that type of a person.
“I bought like 1,000 diapers because they were having a sale where if you bought two boxes you got a $10 gift card back. And then I loaded up on laundry detergent too to get an extra $5.00 gift card as well!”
“Oh man, well in THAT case I’m definitely mad at you… Why didn’t you spend $200!” I sarcastically shoot back ;)
I won’t bore you with the rest of our conversation, but it’s a perfect example of how different our brains can be wired. My wife has trouble spending money based on the *total amount* alone, no matter what it is, whereas my inclination is to load up on these deals and max the hell out of them until they can’t be maxed any more. Especially on things you’re forever buying or investing in (*ahem* diapers. *double ahem* 401(k)). Now if we were on a strict budget it would be an entirely different story as you can’t spend what you don’t have, but since that’s not the case for us today (thanks, financial security!) I revert to eeking out as many possible deals we can get our hands on :)
My wife is a darling no matter how you slice it, but of course earning $30 or $60 dollars for free is much better than earning $15 or even $0.00 – had my wife REALLY been worried about ponying up too much. So it’s worth having a conversation with yourself (or your spouse/bf/dog/lover) so you know how to capture similar opportunities in the future if and when they may cross your path again. My wife knows now to “load up, baby!” and to do her best to not worry. Time will only tell if it works…
Another variable that comes into play is the type of opportunity that can pop up. When it comes to rebates or *guarantees* of free money, I’m fairly quick at pulling the trigger and going for it. I’ll happily do any of these with my eyes closed:
- Maxing out 401(k) benefits (can you tell I’m passionate about that? ;))
- Stocking up on supplies when great deals come along (that you truly need)
- Paying down debt, no matter what type it is (you can never go wrong with that!)
- Furthering education. Whether in courses, or degrees.
Then there are those other opportunities I get super shy around, even though deep down I know they can lead to greater and better things. These include:
- Speaking events (great for business, not so much my stress)
- Business investments/projects (this is a whole other can of worms, but I put it here because even though I’m getting better at sussing out the good stuff vs the bad and jumping on it, I still hold back way more than I should as my conservative side flairs up)
- Anything else that rewards you years and years ahead. Except for retirement $$ for some reason? ;) (I suck at being patient overall, but when it comes to retirement it’s incredibly easy for me…)
I’m sure you guys can relate. Some things you’ll jump on without batting an eyelash, and others you need some time to assess before taking action (or not taking action). There’s many levels of “spending more to get more.” And if the big decisions were that easy, everyone would be Warren Buffett :)
So the point today is to figure out the things you can jump on right away at a moment’s notice (so you don’t lose the opportunity at hand), vs those you need to step back from and take more time for consideration. You probably already know the big ones (buying a house, investing in a company), so focus more on the smaller things and master those first.
One last example before we wrap up. When I first started offering blog coaching services, I got an email from someone who wanted tips on making more money through his blog. He went on and on about how much he could learn from me, and how he wants to invest time and money into it/etc, but when it came down to pulling the trigger he bailed. My rate was just too expensive for him ($100/session).
He told me he knew he should do it, but he just couldn’t justify ponying so much up (perhaps cuz the total number scared him more than the results, like with my wife?). I told him not to worry about it as I’m certainly not the cheapest person around, and before we wrapped up I gave him a few (specific) last-second pointers just to be nice. I’ve been getting paid to help people for over two years now, but it still feels kinda weird charging for something I naturally like to do anyways for free (and for fun :)).
Anyways, we go our merry ways and three months later he shoots me an email out of the blue: “Dude! One of your tricks totally worked! I make $300+ extra every month! Thank you so much!” “You’re welcome!” I happily shot back. “Now where’s my money, bitch?” I wanted to snarkily tack on, but of course I didn’t ;) And since that was over two years ago, it’s quite possible he’s now made over $7,000 extra off his blog. Not to mention any future projects he’s likely to implement the tip on.
The point? Sometimes it’s worth taking a chance on spending more so you can make more – even if it’s not guaranteed (and of course it won’t be a detriment to either your health, or your wealth). I say this just as much to you, as I do to myself too since I also struggle with it at times.
A trick I’ve tried to incorporate over the years is having a financial limit in my head for the amount I’m allowed to risk regardless of the consequences. I use it for business ideas, finding possible “steals” at yard sales, and even when I used to play poker all the time ;) This limit for me is $100, randomly enough (I swear I didn’t plan that), and it allows me to make quicker decisions and a little less over thinking.
So the takeaways today are two fold:
- Be prepared to jump on opportunities (by knowing your comfort levels/plan in advance)
- Take calculated chances with a cap you don’t mind losing.
It’s all about being as prepared as you can for opportunities. Both in money, and in life. And of course if you take nothing else away from this article, make sure you’re at least CONTRIBUTING TO YOUR 401(K) PLAN! ;)
// End novel
[Awesome photo courtesy of Camille from Challenge Mantra]
Jay loves talking about money, collecting coins, blasting hip-hop, and hanging out with his three beautiful boys. You can check out all of his online projects at jmoney.biz. Thanks for reading the blog!