Spending money is a skill. You can spend your money with intelligence or stupidity. You can use money to your advantage or disadvantage.
Businesses that spend money intelligently make more profit. Their employees earn higher salaries and their customers get better service.
Governments, especially in the , have a reputation for wasting money. Millions are spent on programs that produce nothing and help no one. Money is used to help politicians gain popularity instead of actually helping the country or its citizens.
Your spending habits can increase your wealth or push you further into debt. For example, a married couple accumulates over $2 million during their working years with intelligent spending. Another married couple, with a similar income, has no savings when they reach their 60s because they spent their money foolishly.
If you are smart, you spend your money using the "Bean Theory."
"Finance is best understood as a COMMODITY* in terms of beans." "So many beans issued to an activity and so many more beans back."
--
L. Ron Hubbard (*Commodity: An item that is bought, sold or traded.)
In other words, you look at your cash as a bunch of beans. You trade those beans in a way that gives you more beans than you started with. You spend to enhance your income.
Three Forms of Transportation
Let's say you want to use the Bean Theory to decide on the best way to get to work. You have three choices. You can ride the bus for $65 per month, buy a 2002 Toyota Corolla for $10,000 or buy a 1966 Austin-Healey sports car in mint condition for $35,000. Which fits the Bean Theory best?
The bus is cheapest, but you often arrive for work in a bad mood. Every morning, you wait for the bus in the cold weather for 5-10 minutes. The trip takes 45 minutes. If the bus makes several stops that day, you arrive for work 10 minutes late.
With the , you only need 10 minutes to get to work and arrive on time. The car never breaks down because you maintain it. The maintenance and parts are inexpensive. The gas mileage is excellent.
The Austin-Healey looks gorgeous. New paint, new engine, new tires. Everyone at work stands around admiring your car. But a week after you buy it, it breaks down on your way to work. You waste two hours getting a tow truck and a ride to work. Only a few mechanics can fix it, so you have no transportation for two weeks. You pay $2,000 for repairs.
Which form of transportation is best for your Bean Theory? Which will help you earn the most money?
What if you had another transportation need? For example, you needed a car to take wealthy people around town to look at buildings for sale. What type of car would make you the most money? Probably a large four-door Mercedes or Cadillac, right? What if you were a carpenter or a brick mason?