The Only Four Things You Can Do With Money And Why They Matter
There are only four things you can do with your money:
- Pay taxes
- Spend it
- Invest it
- Give it away
That’s it. Not very exciting, is it?
What is important is how you use your money to create the life you want. Let’s take a closer look at each of these.
1. Pay Your Taxes
Paying taxes is a required part of participating in the system we live in.
You should use every part of the tax code to lower your taxes as much as possible over your lifetime. At the end of the day, some of your money will go toward taxes.
Taxes include:
- Income tax
- Sales tax
- Payroll tax
Let’s be strategic in controlling our tax burden. Because this is a significant use of your money, it deserves thoughtful and intentional planning.
2. Spend Your Money
Now we are talking! You can spend money on things you need and things you want. Spending on things you do not need and do not truly want rarely leads to lasting happiness.
Many people split their spending between wants and needs. A better approach is to align your spending with your values and make sure you get appropriate value from every dollar you spend.
That starts with knowing exactly how your money is being used. You cannot be intentional about spending if you are not tracking it.
3. Invest Your Money
Investing is interesting because you invest money today to spend it and the money it earns in the future.
The goal is simple: to be able to spend more later.
When you think about it this way, investing is really just spending money in the future.
4. Give Your Money Away
Giving money away can have tax benefits, but those benefits never replace the money you give.
Giving your hard-earned money is most meaningful when it supports causes you truly care about. The tax benefits simply reflect that the government encourages donations to qualified organizations, such as charities or churches.
Final Thoughts
That’s it. Your money will ultimately be used for only four things: taxes, spending, investing, and giving.
The key is being intentional about how much goes to each and why.
What Do You Think?
- Do you think of your money as more than a means to an end?
- How do you balance your use of money across these four areas?
- Are you tracking your spending?