Spending Money Without Really Spending Money

With rising costs and increased learning needs, financing our children's education is no longer a simple walk in the park. Discuss with other parents about how they are managing their finances to cope with their expenses.

Spending Money Without Really Spending Money

Postby pirate » Thu Jan 09, 2014 2:31 pm

We all know that we should save for our retirement. But most of us also get the occasional urge to buy stuff and generally spend money frivolously. Life would be pretty boring if it is all about work, work, work and save, save, save. If only there is a way to spend money without really spending money.

But there is!

Let me give an example. Suppose I spend $1,300 buying a mint $1,000 banknote with a special 'collectible' serial number, such as 999999 (ok, ok 888888 would be better, but it costs a lot more!). Did I just spend $1,300 or have I only spent $300? If I really need money to pay off the friendly neighbourhood ah loong, I can always bank it in or give it to him for $1,000. Or more likely, I can easily get $1,100 for it from the neighbourhood hawker stall owner or money changer. So, I haven't even spent $300. But In the meantime, I get the same kick I get from spending $1,300 on something else.

Thus, the art of spending money without really spending it is simply to buy something that holds value whenever one has the urge to go out and splurge on something frivolous.

The good news is there are many such 'frivolous' things around. Examples include jewellery, art, rare coins, stamps, antiques etc etc. Now you know why the rich just get richer.

Of course, it is not really as simple as I make it out to be. One must do one's own homework on the subject matter in order to be able to sniff out good deals and avoid pitfalls, like buying fakes or being taken for a ride by unscrupulous sellers. The good news is that with the advent of the internet, much knowledge that used to be generally unavailable or were 'trade secrets' can now be found online.

Also, the smaller the buy-sell spread, the better. We all know some people simply love diamonds. Diamonds are sparkly, expensive and great for showing off. The problem is that the difference between retail and wholesale, and buy and sell prices for diamonds can be pretty big. Gold, on the other hand, tend to have a smaller spread. So, unless one is able to buy diamonds at wholesale or close to wholesale prices, buying gold jewellery would make better sense. Still, buying that 1 carat diamond ring would still be a better way to spend the money than at the karaoke bar or that very expensive restaurant.

Finally, I haven't even mentioned that some of these things actually appreciate in value over time - often at a rate higher than inflation. Ok, ok, they may drop in value too. But they rarely drop to zero even when the stock markets crash and people are jumping off buildings.

The best part is, it is never too young to start! When I was still in school, I spent $200 of the pocket money I have saved up for months on a rare coin. I was panned by my parents for wasting money. I still have that coin. I can sell it with my eyes closed for $1,500-$2,000.

But don't always look at it as an investment! Once you do, it becomes less fun. And some people will get carried away by greed, and get swindled. Now, where is the fun in that?

So, the next time you feel a sudden and irresistible urge to go on an outrageous shopping spree because your boss or spouse is being such a jerk, seriously consider shopping for some overly ostentatious gold jewellery instead of overly priced shoes.

Who says you can't have your cake and eat it?

pirate
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Re: Spending Money Without Really Spending Money

Postby NigelTKM » Fri Jan 10, 2014 12:13 am

pirate wrote:We all know that we should save for our retirement. But most of us also get the occasional urge to buy stuff and generally spend money frivolously. Life would be pretty boring if it is all about work, work, work and save, save, save. If only there is a way to spend money without really spending money.

But there is!

Let me give an example. Suppose I spend $1,300 buying a mint $1,000 banknote with a special 'collectible' serial number, such as 999999 (ok, ok 888888 would be better, but it costs a lot more!). Did I just spend $1,300 or have I only spent $300? If I really need money to pay off the friendly neighbourhood ah loong, I can always bank it in or give it to him for $1,000. Or more likely, I can easily get $1,100 for it from the neighbourhood hawker stall owner or money changer. So, I haven't even spent $300. But In the meantime, I get the same kick I get from spending $1,300 on something else.

Thus, the art of spending money without really spending it is simply to buy something that holds value whenever one has the urge to go out and splurge on something frivolous.

The good news is there are many such 'frivolous' things around. Examples include jewellery, art, rare coins, stamps, antiques etc etc. Now you know why the rich just get richer.

Of course, it is not really as simple as I make it out to be. One must do one's own homework on the subject matter in order to be able to sniff out good deals and avoid pitfalls, like buying fakes or being taken for a ride by unscrupulous sellers. The good news is that with the advent of the internet, much knowledge that used to be generally unavailable or were 'trade secrets' can now be found online.

Also, the smaller the buy-sell spread, the better. We all know some people simply love diamonds. Diamonds are sparkly, expensive and great for showing off. The problem is that the difference between retail and wholesale, and buy and sell prices for diamonds can be pretty big. Gold, on the other hand, tend to have a smaller spread. So, unless one is able to buy diamonds at wholesale or close to wholesale prices, buying gold jewellery would make better sense. Still, buying that 1 carat diamond ring would still be a better way to spend the money than at the karaoke bar or that very expensive restaurant.

Finally, I haven't even mentioned that some of these things actually appreciate in value over time - often at a rate higher than inflation. Ok, ok, they may drop in value too. But they rarely drop to zero even when the stock markets crash and people are jumping off buildings.

The best part is, it is never too young to start! When I was still in school, I spent $200 of the pocket money I have saved up for months on a rare coin. I was panned by my parents for wasting money. I still have that coin. I can sell it with my eyes closed for $1,500-$2,000.

But don't always look at it as an investment! Once you do, it becomes less fun. And some people will get carried away by greed, and get swindled. Now, where is the fun in that?

So, the next time you feel a sudden and irresistible urge to go on an outrageous shopping spree because your boss or spouse is being such a jerk, seriously consider shopping for some overly ostentatious gold jewellery instead of overly priced shoes.

Who says you can't have your cake and eat it?


Very well written post pirate! I like your perspective.

It is true that people tend to spend alot and lose track of their real goal due to that sudden urge. There is a reason why the rich get richer, and that is wealth management/protection. Because most people when they earn more they also spend more. How often do people spend their bonus on investing or getting a proper plan out for their retirement or for their loved ones.

In fact most of the time I hear people saying "oh my bonus is x times this year, time to go for holiday, or time to buy that car, time to buy this buy that"

When the pay rise, people buy bigger house, bigger cars more branded stuffs. And plunge into more debts thus exposing themselves to the risks in life.

Is that holiday, car, LV bag worth it? When we start to spend on things we don't need, eventually we will have to sell off things we need. And when life throws a wrench into your plan, a huge portion will be wiped off. Even the accumulated investments might become channeled into paying off debts instead of paying for that retirement.

Everyone knows this at the back of their minds, but why do they not plan for it? Well like what is mentioned be disciplined and plan for your own business, i.e. our own lives.

NigelTKM
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