You hear about the importance of saving money all the time, but seldom do people say it’s okay to waste a little cash. On many levels, it makes more sense to be conscious about your money decisions.
The cost of living is high — the cumulative inflation rate since 2020 is 24.2%, per the U.S. Inflation Calculator. This means the cost of everyday services and goods has gone up by about that much in just five years. Something that cost $100 in 2020 would now cost around $124.
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So, sure — don’t spend money on impulse purchases or things you’ll later regret. But in a recent video, financial expert Ramit Sethi said it’s okay to waste a little money. The reasons might surprise you.
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Wasting Money Isn’t Necessarily a Bad Thing
“I actually think one of the best skills you can do right now, today, this weekend, is to practice wasting a little bit of money,” Sethi said in the video.
This doesn’t mean you should go out and spend your entire paycheck on concert tickets and hotels when you need to pay rent. Nor does it mean you ought to max out your credit cards to buy groceries. What it does mean is that you shouldn’t be “petrified” — as Sethi noted many ultra-frugal people are — of spending money just because you might not end up liking something.
Money expert Tori Dunlap shared a similar sentiment in a recent article, emphasizing that you don’t have to feel guilty when spending money on something you enjoy or something you value. She advised shifting your mindset, knowing your values and connecting your values to a budget to stop feeling guilty.
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Waste Money Strategically
Sethi did say that you shouldn’t necessarily waste money every day. According to him, you should still keep an eye on the numbers and do an audit of your finances every six to 12 months.
But it’s also important to understand that wasting money isn’t the worst thing you can do. He gave an example of buying something he doesn’t actually want but then missing the deadline to return it. Instead of fretting about the $10 — or whatever amount it might be — he might decide to donate it.
You can do the same. If it’s a big-ticket item that costs hundreds or thousands of dollars — or any amount that’ll eat into the funds you truly need — then it’s probably worth returning it. But if it’s not detrimental to your overall financial health, don’t worry about it so much.
“I think that … fear of waste can be overcome with practice, deliberate practice,” Sethi said. “Imagine going to a restaurant and saying, ‘You know what, I’m going to try something new today.’ That little voice in the back of your head is going to first tell you ‘What if you don’t like it?’”
Rather than listen to that little voice, try it anyway. If you don’t like it, you don’t have to eat it or order it again. It’s not a major loss — and at least you’ve tried something new.
“There are so many ways to overcome this fear of wasting money, and when you overcome fear, then you become more adventurous,” Sethi said. “Always staying within your numbers, yes, but realizing it’s okay to try different things. It’s not going to kill you. Even if all of it doesn’t work out, that’s okay.”
Know Your Money Dials
On his website, Sethi talked about money dials. These are the things someone loves to spend money on. Here are 10 money dials, per Sethi:
Convenience
Travel
Health and fitness
Experiences
Freedom
Relationships
Generosity
Luxury
Social status
Self-improvement.
A recent video from money expert Rachel Cruze highlighted one of these money dials: convenience. In it, she explained that spending extra money to save time can be worth it.
Spending money on the things you truly value and love — your money dials — doesn’t make you a wasteful spender. It makes you a conscious spender and, according to Sethi, can help you lead a rich, fulfilled life.
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This article originally appeared on GOBankingRates.com: Ramit Sethi Wants You To Waste Money — Here’s Why
