A Quick Guide on How to Spend Money

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Just before we dig into the basics of how to spend money, take a look at this quote:

“We experience some form of mental or physical pain when we pay for things; shopping might provoke feelings of happiness, but studies have shown that when it comes to paying, the areas of the brain involved in processing physical pain are a trigger.”

Faced with different responsibilities, how to spend money wisely is one of the many questions that prove difficult to answer. In this article, we share three ways you might not be spending money wisely.


Overspending seems to be the most unconscious money habit we all often commit. It is often rampant at the beginning of the month when the paychecks just rolled in. We are often faced with many burdens and at this time, our friends and relations often make financial requests.

We are stuck up in the nightmare of emotional debts — spending our paychecks long before owning them. This sums up what we will later term overspending as the month dives deeper. Overspending is what makes our month seem longer and the reason for the 70 days of January syndrome.

In simple terms, whenever we spend more than our income, we are overspending. In order to meet our financial goals, we need to live within our means. People often overspend due to peer pressure, choosing instant enjoyment over future gains, the inability to overlook wants over needs, keeping up with the Joneses, and other trivial reasons.

Group influence and thinking

This is a popular culture among millennials. Many feel influenced by friends to spend money even when they don’t have them. Unhealthy relationships often blow up spending within this age range as demands become higher due to the need to flaunt wealth.

Being honest with yourself and living within your means. If you can be honest and live within your means, you’ll prevent yourself from financial troubles.  You may also find that you’ve helped others make better financial choices for themselves.

Not having a budget

If you don’t use a budget, you probably have no idea where your money’s going or even how much you have to spend. With our article on how much you should save, you can learn how to create a budget and get your financial house in order. This will help you determine if you are spending more on your wants, like eating out, than your needs, like rent.

That said, we have a piece of cracker advice! Sometimes, it is actually better to spend more. To explain this, let’s imagine we have two items — A and B. If purchasing item A costs twice the cost of B, but has a lifetime value that outlives that of the B by far, you should go for A — if you can afford it.

The reason behind this is quite simple, you will end up buying more units of B, given the shorter lifetime value, within a given period and end up spending more than what you would have spent on A within that same period.

A costs #100,000 and can last for 2 years.
B costs #45,000 and can last for only 6 months
If you go for B, you will end up spending #180,000 within 2 years. So you get the logic, right?

Hence, sometimes, going for the cheaper option can actually prove to be more expensive. So, we advise you to consider the long term whenever making purchases or any expense; particularly in festive periods like December.

Learning how to spend money wisely will become easier once you decide to pay attention to the points we have listed above and implement strategies to track and review your expenses. Don’t forget to save and invest with Cowrywise as well!


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