Being able to spend your money anytime you want has always been a fundamental aspect of personal financial independence. Although many of us have the freedom to make any purchasing decision, we need to consider the factors that affect how free we are regarding our spending habits.
External Influences
External influences such as peer pressure and advertising can shape our purchasing decisions. Family, friends, and marketers can persuade us to buy things we don’t need or want. Sometimes, pressure from society can steer us to spend on items just to fit the social norms.
Financial Constraints
Your financial situation can limit your financial freedom. Living on a budget may help manage your spending decisions, but it also serves as shackles to your ability to spontaneously buy items or invest in certain experiences you want.
Debt and Obligations
Your spending freedom can change depending on your current debt and financial obligations. If you reduce your debt and responsibly manage your obligations, you can free up money for any discretionary expenses.
Goals
Your spending choices are influenced by your long-term financial goals, such as mortgage, retirement, education,etc. When you focus on these goals, you end up restricting yourself to ensure you achieve them.
Financial Literacy
Financial literacy will empower you to make informed spending decisions. If you know how to create and follow a budget, invest your money, and manage your debt, you can improve your freedom to spend.
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