Have you ever wondered why some people seem to build wealth effortlessly while others struggle to make ends meet? The answer often lies in financial habits. While some focus on spending, others prioritize investing — a distinction that can shape not only your finances but also your future quality of life.
At Bernez, we aim to help you reflect on your financial habits and, more importantly, transform the ones holding you back into habits that work in your favor.
The Spending Habit: Instant Gratification
Spending is easy and, often, pleasurable. Buying that daily coffee, a new outfit, or the latest tech gadget provides immediate gratification. However, this habit can become problematic when impulsive spending overtakes financial priorities.
Signs You Have a Spending Habit:
Your money disappears quickly, and you're unsure where it went.
You live paycheck to paycheck.
You rely on credit for non-essential purchases.
Your savings are minimal or non-existent.
Long-Term Impact:
Impulse purchases can lead to debt and financial instability.
Not investing means your money isn't working for you.
Lack of planning makes achieving important goals, like buying a home, traveling, or retiring comfortably, much harder.
The Investing Habit: Deferred Gratification, Long-Lasting Rewards
Investing, in contrast, requires patience and a long-term vision. Instead of spending on depreciating items, you allocate your money to assets that can grow over time, like stocks, real estate, or mutual funds.
Signs You Have an Investing Habit:
You consider the long-term impact of financial decisions before spending.
You save and invest consistently, even in small amounts.
You understand the power of money to grow when managed wisely.
You have clear financial goals and a plan to achieve them.
Long-Term Impact:
You build wealth and financial stability.
You generate passive income, reducing financial stress.
You gain peace of mind, knowing you're prepared for the future.
Key Differences Between Spending and Investing Habits
Spending Habit | Investing Habit |
Provides immediate gratification | Requires patience |
Loses value over time | Gains value over time |
Focuses on the present | Focuses on the future |
Can lead to debt | Helps build wealth |
How to Transform a Spending Habit into an Investing Habit
If you identify primarily as a spender, don't worry. Financial habits can change with time and discipline. Here’s how you can transition:
1. Create an Intentional Budget Allocate a percentage of your income for spending, saving, and investing. For instance:
50% for needs (rent, food, transportation).
30% for wants (entertainment, hobbies).
20% for savings and investments.
Pro Tip: Automate your savings and investments to avoid the temptation to spend.
2. Define Clear Goals Think about what you want to achieve in the short, medium, and long term. Do you want to buy a house? Save for retirement? Having specific goals motivates you to invest rather than spend impulsively.
3. Differentiate Between Needs and Wants Before making a purchase, ask yourself:
Do I truly need this?
How will this decision impact my financial future?
4. Shift Your Spending Focus Spend on experiences or assets that offer long-term benefits instead of material items that lose value quickly.
Example: Instead of buying the latest phone model, consider investing in a course that enhances your skills and increases your earning potential.
5. Educate Your Financial Emotions Resisting instant gratification can be challenging, but remember: investing can be exciting too, especially when you see your money grow over time.
Our Advice
Spending isn't inherently bad — after all, we work to enjoy life. However, balancing it with the habit of investing is what will truly enable you to build a future full of opportunities.
Remember: Every peso spent is a peso that could have been working for you. At Bernez, we're here to help you find that balance. If you need guidance on how to start investing or want to improve your financial habits, reach out to us. Together, we can create a plan that transforms your finances and your life.
Which lifestyle do you want to build? The choice is in your hands. 🚀