You work hard for your money and want to spend each dollar wisely. So after paying your bills, what should you do with your discretionary income?
How you spend your money is a very personal choice, meaning there is no one-size-fits-all formula for shelling out that discretionary cash. We are here to help you think through what makes the most sense for you while keeping you on the path to meeting your financial goals.
Are Millennials Managing Finances Differently Than Previous Generations?
If you tend to spend your money on experiences over material goods, you are not alone. Nearly 80 percent of millennials report that they would choose an experience over buying a physical product. And that isn’t just because they want to impress their Instagram followers.
Why Might Experiences Make Us Happier Than Physical Goods?
In short, the answer is science! You may be happier purchasing tickets to a Rockland Trust Bank Pavilion concert (shameless plug) instead of buying the newest iPhone for a number of psychological reasons.
Our brains are hardwired to keep us at a status quo. That means that when something good happens, we end up adapting to that event which brings us back to a neutral state. When we buy an item, the shiny, new toy feeling fades because it becomes part of our routine and everyday lives. This happens less often with events, which tend to be unique experiences.
Possessions also don’t contribute to social relationships like experiences do. There are long-lasting, positive effects of spending time with those you love. Good, strong relationships are not only important to happiness, but also health and well-being. Spending quality time with the people that matter to you helps to strengthen these bonds and investing in an experience creates priceless memories for you to treasure together.
So Which Do I Pick - Experiences or Goods?
Ultimately, it depends on your goals, values and financial budget. You may prefer to spend your money on a fun vacation overseas, while your friends may prefer to spend theirs on a new pair of shoes. Of course, your discretionary income amount may impact your budget which will likely change over time. As your income fluctuates, you may prefer spending money and time on events that create memories and deepen relationships.
Remember to Pay Yourself First
Before spending, consider socking away some cash for retirement, an emergency or rainy day. Even if retirement is decades away, it’s important to start saving early. Putting aside the cost of a cup of coffee per day can have a major impact on the funds you have available later in life, allowing you to enjoy your retirement. A smart savings strategy will also help ensure you don’t rack up credit card bills should your car or home need an emergency repair.
Take Our Quiz to Find Out Which Type of Savings Account is Right For You!
Experiences and relationships matter in your life and we think they matter in banking as well. Our expert bankers are happy to help you find ways to reach your financial goals, from repairing your credit score to life experiences such as buying your first home.
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