Budget Sense

Money is something we should enjoy and use for good. It is not something we should stress about or cling to at all costs, otherwise, what is the point really? The idea is to feel good and express gratitude about your ability to spend on things you enjoy and brings you and those around you joy, great experience and utility. So how do you achieve this? It starts with being financially efficient.

Financial efficiency is a simple concept that is lost on many: it is basically your ability to stretch your money, where you are spending it on things that matter the most and bring you the biggest value, while reducing wasting it on useless things.

Peak financial efficiency is to maximize the gap between the two: spending money on things that give you the greatest value – be it joy, utility or other measures- while being ruthless with wasteful spending , be it fast food, unnecessary monthly subscriptions etc.

But problems arise when you are not even sure what is useful and what is considered wasteful and in fact may even mix the two, thus completely ruining the definition of what it means to be efficient with your money and finances. In that case, you need to do an audit of your weekly and monthly spending and decide on each item: whether it is something that you are using and can’t live without. Is it something that makes you happier? Does it make your life better and more convenient? How much does it cost compared to the utility you are getting back? For example, let us take a hypothetical monthly GYM membership that costs $60. On the surface, having a GYM membership is money well spent given the huge health and mental wellness benefits. But that is only if you are actively using your membership and going at least 2-3 times a week, on a consistent basis. Otherwise, if you hardly ever go – say once a month – then this otherwise great use of money turns into waste and you are better off eliminating it by cancelling the membership. Just walk outdoors instead.

On the other hand, if time with family means the most to you, then spending money on a Netflix subscription wouldn’t be such a bad idea, as you can watch and socialize together. At the end of the day, what is considered useful or wasteful is subjective and may vary from one person to the next. I may value having a car even if total mostly expenses is in excess of $500 while someone else may view that as total waste and would rather just take public transportation.

It is said – backed by research- that most millionaires achieved their status by being extremely efficient with their money. They reduced wasteful spending almost to a science, while turning the act of spending their money on useful things into a work of art. In other words, being financially efficient with your money will translate into financial stability and security in the long term.