How to spend your finances properly

The New Economy Calls for Spending, Not Saving

In order for readers to get the basic gist of this article right, it is first necessary to clarify a few things about finances and spending. In mid-summer there was an article on RichDad whose title can be translated as "Spend All You Earn." Its main gist is that traditional saving in the form of putting money away is evil, as opposed to those who spend all their money.

At first glance, such advice may seem like complete nonsense, especially to rational people with a classical economic education who have had years of "right stuff" drummed into them about how to study, work, and save money. To such people, the very idea of trying to build wealth by spending everything seems wild and unacceptable. But is it really so?

How does the middle class spend their money?

The main problem that makes the conservative middle class members described above think that building wealth through spending money is impossible is the misconception of the very concept of "spending money. "The vast majority of people mean exclusively buying passives, like houses, cars, appliances, clothes, tourist trips, etc.

Spending their money to pay for services, consumer goods, food, etc., such workers almost always have to live from paycheck to paycheck, and the more they earn, the more they spend (buying a bigger house, a newer car, going to expensive restaurants). Not surprisingly, they see the only way to overcome this vicious circle as saving as much of their income as possible.