Five things to spend your money on.

[SUPERSAIAN]

I think that we should allocate our money into 5 categories.

1. Necessary expenses. I am talking electricity bills, food, school fees (if you are studying or have children), housing, healthcare, and transportation. I believe this group is where most of our money goes because we basically can't survive without these things.

2. Emergency fund. In cases of emergency, we should be able to get some money for it. Especially in countries where healthcare is not free, we should be prepared to pay if ever we get into accidents or we get sick though hopefully it never happens but still we have to be always prepared either way.

3. Savings. Some people save up for specific things like buying a better house, a better car, getting your kid into a better school among other things. Some people may just save for the sake of having money to pull for emergencies. I think emergency money and money I want to use into building a new home should be separate.

4. Investment. Aside from our day jobs where we get most of our money to pay for our necessary expenses, we should invest in assets to make our money grow. This could be gold, real estate or cryptocurrencies.

5. Luxury. When I mean luxury, I do not actually mean it has to be expensive. But I say luxury because there are things that we do not need but still want to have or experience like traveling or eating at a good restaurant. I believe that even though we should be smart in finances this does not mean we have to completely deprive ourselves of enjoyment.

Nice and correct order, what you said and your order resembles a condition of money that I prefer and work on. Luxury should always be the last choice, trying to live a luxurious life with an ordinary salary is a very wrong choice, usually when you use your priorities for savings, emergency money and investments, the foundation is solid and sustainable at its best, so leaving luxury for later accelerates the others.

[STT]

I feel like the list itself could be considered a luxury, the majority of the world probably only has the first 2 categories.   Just getting by with food, rent and taxes and the occasional emergency expense you can barely handle, the rest is a bit of a dream.
  Rich countries you might maybe have some kind of savings or pension via your government but its not a given and I think most of the world is lacking this.   Savings, investment and luxury all get stolen by inflation and other disasters in the economy largely paid for by the poorest; the only exception is the people who can save in a non monetary way somehow it has to be rare.

[gunhell16]

I think that we should allocate our money into 5 categories.

1. Necessary expenses. I am talking electricity bills, food, school fees (if you are studying or have children), housing, healthcare, and transportation. I believe this group is where most of our money goes because we basically can't survive without these things.

2. Emergency fund. In cases of emergency, we should be able to get some money for it. Especially in countries where healthcare is not free, we should be prepared to pay if ever we get into accidents or we get sick though hopefully it never happens but still we have to be always prepared either way.

3. Savings. Some people save up for specific things like buying a better house, a better car, getting your kid into a better school among other things. Some people may just save for the sake of having money to pull for emergencies. I think emergency money and money I want to use into building a new home should be separate.

4. Investment. Aside from our day jobs where we get most of our money to pay for our necessary expenses, we should invest in assets to make our money grow. This could be gold, real estate or cryptocurrencies.

5. Luxury. When I mean luxury, I do not actually mean it has to be expensive. But I say luxury because there are things that we do not need but still want to have or experience like traveling or eating at a good restaurant. I believe that even though we should be smart in finances this does not mean we have to completely deprive ourselves of enjoyment.

Nice and correct order, what you said and your order resembles a condition of money that I prefer and work on. Luxury should always be the last choice, trying to live a luxurious life with an ordinary salary is a very wrong choice, usually when you use your priorities for savings, emergency money and investments, the foundation is solid and sustainable at its best, so leaving luxury for later accelerates the others.

The luxurious life is not suitable for those who only earn 350$-400$, this amount is the normal salary here in our country every month, but what is sad is that most of the regular employees here are even though their salary is not enough, they still follow the trend and feel rich or at the same level as the rich people.

There are others who just to look rich buy class A mobile phone devices so that they look rich too or others can see that they also have a luxurious iPhone brand but it's installment, you know what I mean. Because what you say is true and real luxury is really just a bonus in reality.

[Cryptohygenic]

I don't know why I have to feel like we are just jumping in the middle of a conversation here because the discussion does not have a classification. Although Op pointed out interesting categories that has to do with responsible and necessary budgets but the thread does not contain headlines about the essence of all that being listed as analysed there in.
I don't even know if we have to take this discussion as case study of financial management or a focus on expenses Op just picked random categories.

[MarjorieZimmermanGinger]

5. Luxury. When I mean luxury, I do not actually mean it has to be expensive. But I say luxury because there are things that we do not need but still want to have or experience like traveling or eating at a good restaurant. I believe that even though we should be smart in finances this does not mean we have to completely deprive ourselves of enjoyment.

I just want to highlight the fifth point because most people have difficulty controlling their finances because of luxury. This starts because of an unbalanced life and most people pursue luxury in life that is not commensurate with their ability to produce so that in the end they are trapped in much bigger problems. An excessive lifestyle can make someone trapped in financial problems because in certain conditions income and expenses are not balanced.

Pleasure does not have to be luxurious by spending a large budget because sometimes pleasure can be obtained just by traveling with family. But the problem is that people think that to achieve pleasure they have to spend a lot of money, even though small activities done together with family can also be pleasure and peace of mind.

[bubilas]

I think that we should allocate our money into 5 categories.

1. Necessary expenses. I am talking electricity bills, food, school fees (if you are studying or have children), housing, healthcare, and transportation. I believe this group is where most of our money goes because we basically can't survive without these things.

Food and rent are the most important categories because they cannot be avoided. Also included here are bills, internet and mobile communications. Here you can save money if you do not buy expensive goods and look for promotions.

2. Emergency fund. In cases of emergency, we should be able to get some money for it. Especially in countries where healthcare is not free, we should be prepared to pay if ever we get into accidents or we get sick though hopefully it never happens but still we have to be always prepared either way.

I think few people put money aside for this, so everyone ends up in a bad position when something happens to them. And why not keep this money in good investments?

3. Savings. Some people save up for specific things like buying a better house, a better car, getting your kid into a better school among other things. Some people may just save for the sake of having money to pull for emergencies. I think emergency money and money I want to use into building a new home should be separate.

Same as point 2. Even if someone is raising money, isn't it better to invest it to make it work?

4. Investment. Aside from our day jobs where we get most of our money to pay for our necessary expenses, we should invest in assets to make our money grow. This could be gold, real estate or cryptocurrencies.

Our topic

5. Luxury. When I mean luxury, I do not actually mean it has to be expensive. But I say luxury because there are things that we do not need but still want to have or experience like traveling or eating at a good restaurant. I believe that even though we should be smart in finances this does not mean we have to completely deprive ourselves of enjoyment.

It is better to value spiritual riches. Like books, for example. It is not expensive and makes you feel better, outside of the ordinary.

[slapper]

Why stop at five? There’s an invisible category: “spending for freedom”. Not the freedom that gets sold to you as a credit card slogan, but the real one: having the margin to say no, to pivot, to pause. Why is that never in anyone’s list? Maybe because “freedom” is hard to quantify, and anything you can’t quantify, the system ignores

Necessary expenses, of course. But who decides what’s necessary? For one person, therapy is luxury. For another, it’s survival. Transportation in the US is a car note, elsewhere it’s a bike or a walk. The way you spend is a direct mirror of your social programming and invisible privilege. This is why “budgeting” is always part philosophy, part defense mechanism

Emergency fund, savings; agreed. But the deeper problem is that most people’s emergencies are the system: layoffs, medical bills, sudden eviction. We’re all just betting that our “emergency” will be less catastrophic than average, while the market bets the opposite. There’s dark comedy here: we save not for what could go wrong, but for what’s now normal

Investments: the economy wants us to gamble because stable returns don’t exist for the masses anymore. Why else do you think retail trading apps look like mobile games? Capitalism figured out how to weaponize FOMO

Luxury is underrated and yet over-marketed. Genuine luxury is social capital: time with people who get you, mental clarity, days with zero notifications. But most people spend on distraction, not on joy

[Z_MBFM]

Your details are quite logical. We all earn income for our expenses and to live a happy life. After earning income, whatever is left after meeting our daily needs is considered as savings and is used in times of emergency. However, many people want to live a luxurious life if they can earn a little more money and enjoy that life. It depends on their income and their mentality. Many people are very stingy despite earning a lot of money because they only chase after savings. However, it is very important for everyone to know a proper money management so that they can enjoy all kinds of their life.

[justdimin]

Nice and correct order, what you said and your order resembles a condition of money that I prefer and work on. Luxury should always be the last choice

I partially agree. In my opinion, emergency funds, savings and investment should be considered as a single category like bitcoin and gold could act for all these three purposes in my country. I guess in parts of world where people may not use bitcoin or gold in emergency times still your savings and investments can be on gold or bitcoin regardless of where you are living in the world, I am sure. I completely agree that luxury must be should be treated with least weightage.

Savings, investment and luxury all get stolen by inflation and other disasters in the economy largely paid for by the poorest

You should choose a right investment which comfortably beating the inflation. There would be no point of saving or investing which are providing returns lesser than the inflation rate.

[l3pox]

there's a new book Morgan Housel will launch soon called "the art of spending money", I really want to read it
maybe some here are fammiliar with his other best seller "psychology of money", it's a basic one but really interesting
my new first recommendation if someone asks me what to read about making money and investing

I'm way more interested on spending in experiences than things, here
and at the end of the day so many good things in life are free

[YOSHIE]

I think that we should allocate our money into 5 categories.

• Point 1 is finished, what else can I do, inevitably the expenditure must be done, the fee is indeed routine and required, there is no other way, except: the country bears all of that such as Norway, Finland, Germany and others.
• Points 2 of course emergency funds are very important, we never know what will happen to us, that is important, as well as points, 3 and 4.
• Point 5 I think it shouldn't, if luxury is draining a lot of money, just for a moment of pleasure, there are still many things that can be done.

Conclusion: The five categories if we can manage our finances well, of course these five factors can give us an established economy.

[Sticky Bomb]

5. Luxury. When I mean luxury, I do not actually mean it has to be expensive. But I say luxury because there are things that we do not need but still want to have or experience like traveling or eating at a good restaurant. I believe that even though we should be smart in finances this does not mean we have to completely deprive ourselves of enjoyment.

Luxury can be expensive depending on the person's income. If you can afford the expensive one without harming your finances, please do have it. I can think of luxury as a periodic thing, not what you get always, so when you have the chance and provision for it, please enjoy yourself!.

I always have some mini luxury on weekends to calm off the week's stress and as a means of relaxation as well as some major luxury(for a day) whenever I get a new contract. We live only once and as long as it is not affecting my finances adversely, calculated luxury is an asset.

[DeathAngel]

Everybody is different & has different interests & wants so it’s impossible to suggest the five best things to spend your money on. All I would recommend is to spend money wisely but remember life is very short so try to spend on things that help you enjoy life to the fullest, within your budget of course.

[Mame89]

All the things you mentioned above are things that everyone should do to achieve financial freedom in the future. I believe that all adults must have the desire to do this, even if they have not succeeded, but if we succeed in changing our mindset and are able to manage our finances well, we can definitely do these five things.

I just want to discuss the fifth point, because sometimes people think luxury is taboo, even though luxury does not have to be expensive. Sometimes we also need to make ourselves happy with the hard work we get and enjoy it. Believe it or not, if you are stingy with yourself, there must be something to pay for, such as illness or stress. So don't be too calculating, don't be stingy with yourself. Don't forget to please yourself because it will keep you from getting stressed. When we are not stressed, we can be sure that money will always be there for us, there must always be a way for money to enter our lives by itself. Because a happy heart can be said to be the strongest magnet for attracting money.

[yhiaali3]

I believe that distributing funds in this manner across five categories is general and not necessarily appropriate for everyone.

Because I believe the issue is relative and varies from person to person and from country to country, income plays a significant role in the distribution of financial expenses. The higher income the greater the possibilities available for distribution, and vice versa.

I mean, for a poor person in a poor country the first item "necessary expenses" is the most important need. They may not even have the option to complete the second item, "emergency fund." Such poor people are only concerned with necessary expenses and cannot afford anything else.

[el kaka22]

Drop that to 3. Your expenses, bitcoin, and luxury. Because you can buy bitcoin, for emergency fund, you can cash out very fast very quickly, like in 10 minutes your bitcoins are fiat in your bank account. If you want savings, you can save money and buy bitcoin and save that, and for investment purposes, well quarter of the world had bitcoin one time or another.

So as you can see, all three of them could be bitcoin and you wouldn't need to name them differently. Every month, put some of your money into bitcoin and you will have a good return by the time you retire. It is the greatest retirement fund you could ever find, and some people wants to get rich tomorrow with it, that's their mistake. Just spend whatever you have, and save the rest in bitcoin.

[coupable]

We probably won't be able to pay our expenses if we don't have a source of income, right? And this source of income can start with investment and if the investment we make or choose is right, we can certainly easily make savings, and other things mentioned.

This doesn't always have to be the case. A large percentage of investments don't allow their owners to save from their investment returns. This is normal if the spending ratio equals or exceeds the income ratio. Therefore, the investor will have to either develop his investment to achieve higher returns, which means additional spending and double the effort, or change the investment entirely, which is not easy to do because not everyone can change their activity and adapt their skills to the changes in the job market.
In a previous comment, I discussed the principle of "diversifying sources of income." I recommend reviewing my previous post in another thread:  https://asktom.cf/index.php?topic=5548522.msg65542694#msg65542694

[Justbillywitt]

because that savings will be the one to cover your emergency needs and future investments.

I think it is good that we totally separate our savings from emergency funds. Doing it this way will give you more focus on meeting your financial target. Person like me I wouldn't want a situation were I have gotten certain amount of money in my savings account, all of a sudden emergency from no were will come and reduce the money. But when you have already prepared a different account for emergencies, you know that whatever that is here will be for emergency purposes alone, it will help someone to be more organised. Maybe when you run into an emergency that's bigger than the money in your emergency funds account, then you can borrow from your savings account. But make sure you refund it when things stabilise.

[HONDACD125]

Everybody is different & has different interests & wants so it’s impossible to suggest the five best things to spend your money on. All I would recommend is to spend money wisely but remember life is very short so try to spend on things that help you enjoy life to the fullest, within your budget of course.

I totally agree with that. Most people won't even have an income enough for them to have savings, investments are a far thing for them to reach. Due to having a low income, such people will be forced to take loans and borrow money from others in times of emergencies because they could never save any money that they could use in such times, and it has obviously been impossible for them to have savings and emergency savings separately. So I also think that the order or the list of things that a person would spend their money on would differ based on their income and their priorities.

When I say it depends on priorities, what I mean is that some people like saving money, so that they can have a sum that can be used either for investments, emergencies, or to buy things they always wanted to buy, but some people wouldn't have such a mindset, and they would invest anything that they can spare, either in assets such as cryptocurrencies, or in gold or something, but they don't save that money for the future.

[batang_bitcoin]

1. Necessary expenses. I am talking electricity bills, food, school fees (if you are studying or have children), housing, healthcare, and transportation. I believe this group is where most of our money goes because we basically can't survive without these things.

Most people this is where their salaries goes. There is no room for spending to luxuries or some things that they want to spend to. And that's why if they want to do those things as luxuries, they are looking for another job. So, having 2-3 jobs are pretty normal nowadays and the first job is the one that pays for the rent and food. The second job pays for the bills and then the third job is what pays for those things that you want to do. It's a tough life nowadays, most don't look to work-life balance anymore but barely survives.