We all love to spend money and enjoy a luxury life but there are ways to fulfill these dreams. Earning a good income and spending all of it is not the right way to do it. Of course you would enjoy a rich lifestyle but the one who saves for sometime initially will enjoy more than you later and will always be in a better position than you. I am not discussing how this happens in this post, but just the three categories of people and their lifestyles.

Categories of people: -

1. Spend everything and save nothing - These people have a habit of spending everything they earn. They will spend everything to make their life luxurious right from the start. They will buy a good home, large TV, big car, costly dining at hotels etc. And after all these spending, their interest will be so high that they will not be in a state to save anything. Thus they live a life of luxury enjoying and anytime they have any money left, they will go and buy something else as this is the time to enjoy and savings and all can be done later on in life. Satisfying themselves by planning to start saving later on in life is pretty common with them. But remember that once you get into a habit of spending everything, it is very difficult to resort back. You just cannot see a lot of money in your hands, you are addicted to spending and without spending you wont feel nice at all. And thus the “will save later” story will continue on and on. Now remember, you earn nothing extra, you have no savings and thus your passive income is zero.

2. Save everything and spend nothing - These people have a habit of saving up everything of what they earn. They would just have some minimum expenses and rest of all will get saved into bank or invested into stocks. They have extra expenses once in a blue moon. Well of course they will end up having a lot of money, especially passive income from the investments and savings, much more than the category 1 as time passes, but I would ask that what is the use of earning money if you just cannot spend anything? You still live in a small home, drive a small car etc, and live a frugal life forever. I believe that saving is good but just saving and no spending is not justified. They might enjoy their life like that but I’m pretty certain that if they spend only a part of their income in improving their lifestyle, they would be happier. And I am not asking to spend everything, but spend only a part of. Let the passive income flow in and spend some of your income and reduce the saving as by this time the passive income is already generating nicely and the only way for it is up. So just spend a little bit and see how your life improves and makes you even happier.

3. Spend some and save some - Probably the best category out there. Here people save and spend both. You are spending a part of income on enjoying the life and saving a part of income to enjoy even more in the future. Since money is getting invested into the stocks, passive income will flow into the pockets, so tomorrow is bright for sure and even today is not dull at all. You don’t lose the habit of spending and you also have the habit of saving. This way we can enjoy life forever, once a good passive income flows, we can get richer than the one who always spent everything, we can even buy everything they have and still have savings increased as the passive income would flow till your savings stay invested and which always will. They will be less rich than the category 2, but the life prosperity would definitely be higher.

I will discuss more on savings and importance of savings in upcoming posts. Stay tuned =)

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