Discretionary spending — that is. spending of your choice This is money that cannot be used for fixed expenses such as rent, food, and electricity.
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However, how you spend the extra money in your budget is your choice, and ‘Shark Tank’s’ Kevin O’Leary has an opinion on it. He says it’s nonsense and waste for millennials to waste money on things like coffee from coffee shops, shoes and jeans.
Is O’Leary’s view that overspending on these items can jeopardize your financial well-being true? Perhaps, but you should prioritize discretionary spending based on what is most beneficial and desirable to you. Another perspective is to minimize spending on things that don’t fit into those categories.
O’Leary’s three thoughts are: Millennials are wasting their money And whether his opinion is worth considering.
expensive coffee
Personal finance experts vary on whether buying $4 (or more) coffee on a regular basis is a huge waste of money, but O’Leary definitely disagrees.
He is adamant that paying $4 for a cup of coffee — when you can buy it for less than $1 a cup at home — is “incredibly stupid.”
He told CNBC that he forbids it unless he has paid off his college debt and has savings.
Sure, if you have a lot of debt and don’t put a portion of your paycheck into savings, spending $20 or so a week on coffee may seem like a waste.
All told, I spent $1,040 over 52 weeks, which could have been spent more wisely elsewhere.
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shoes
Another item that Millennials are wasting money on is shoes, according to O’Leary. A Shark Tank investor told CNBC that no one needs more than four pairs of shoes: flip-flops, training shoes and two pairs of dress shoes.
He said it was foolish to buy more than four pairs of shoes because they would never be worn and would sit there for years.
The number and type of shoes you own should be related to your lifestyle, shoe preferences, and even the climate in which you live. Therefore, limiting her to four pairs of specific shoes would be blanket advice that may not apply to everyone’s situation.
According to RunRepeat’s analysis of more than 8,000 pairs of shoes, the average MSRP for shoes in 2021 was $124, and the lowest average MSRP was $94.
Of course, you can expect to find cheaper shoes, but if you spend $100 on new shoes every month, that could add up to $1,200 a year, no matter how much you spend. Again, this might be money spent more wisely elsewhere.
jeans
For O’Leary, the last millennial spender is jeans. He told CNBC that if you have more than three pairs of jeans, one black, one white, and your original jeans, it’s too many and you don’t need them.
Again, this is a blanket statement and does not apply to all Millennials. It depends on your lifestyle and preferences.
Perhaps you have a job that allows you to wear jeans every day. In that case, he will definitely need more than 3 pairs of jeans, but probably not white jeans. You may not be a fan of black jeans.
Economist’s view
Of course, everyone is entitled to their opinion, including O’Leary, but it’s important to remember that it’s just an opinion.
To see another perspective, Dr. Robert R. Johnson, professor of finance at CAIA, says: Creighton University Heider College of Business I had to say it.
“I think Mr. O’Leary is misguided,” Johnson said. “That kind of advice assumes that we all value things in the same proportion. My advice to people is to spend money on activities that provide the greatest utility and spend the least amount of money on Or simply don’t spend money on things that aren’t very useful.”
As an example, Johnson says, if you’re not really into cars and look at them from a more practical standpoint, you shouldn’t feel the need to buy the most expensive car you can afford. said.
“Even better, don’t compare your car to your neighbor’s, especially if your neighbor is a car enthusiast,” he says.
To enjoy life and save money, Johnson advises taking a step back, determining which purchases you enjoy the most, and prioritizing them.
“For some people, their daily latte is very important. Maybe it’s more than just a coffee purchase, it has a social component,” he said. “For others, attending a concert or going out to eat is most important.”
solution
“When it comes to discretionary spending, figure out what you really value and spend your money on what economists call utility,” says Johnson. “Contrary to what Kevin O’Leary and Suze Orman say, if going to your local coffee shop and buying a cup of coffee provides you with great benefits, then go for it, and others may think so.” Don’t feel guilty because it’s pointless.
“We’re all different and need to prioritize our spending to match our unique makeup. The problem people run into is spending money on everything and not prioritizing themselves. Prioritize and focus your resources on the things that make you happy. Minimize spending on items that are less important to you. And be sure to create a budget to pay off debt and save. please.”
GOBankingRates Details
This article was first published GOBankingRates.com: Kevin O’Leary: Millennials are wasting money on these 3 items
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
