Dec 15, 2020 03:49 AM EST
Managing money could be challenging, and some are unsure if they are doing the right thing or spending like crazy. However, according to Morgan Housel, author of the book "The Psychology of Money," no one is crazy.
"People do all kinds of crazy things with their money," he says. Housel admitted that even he does things with his money that completely makes sense to people but might look crazy to others.
Housel discussed in an interview with CNBC several takeaways we can learn from to avoid regrets in the future; it is best to avoid extremes, including saving that could force you to take dramatic measures to play catch up, as per Housel.
According to CNBC, the rich and poor distribution was less dramatic during 20 years of post-World War II than it is today. People who are rich and poor lived similar lifestyles before. Those who are wealthier drove more expensive cars, but everyone had a TV and watched the same shows and listened to the same radio programs.
People's lifestyle continued climbing due to the part that was influenced by social media like Instagram. "The ability to inflate expectations is higher with social media than it ever has been before. It takes that same cycle that plays for 60 years and it just kind of puts it on steroids," Housel said.
There are specific reasons why people save money. However, people should put aside funds to anticipate unexpected events, according to Housel. Having extra savings could give you freedom and flexibility when you need it.
Therefore, waiting for the right job to come along when you are unemployed or finishing your career is okay. One way to check whether you are managing your money in the right way determines if you can sleep at night, Housel said.
You could ask yourself if the things you do would also be financially acceptable to someone else. If it would not, you could learn from that, House suggests.
It is not easy to determine your own negative lifestyle, as per Money Crashers. So here are some behaviors to check and decide whether or not you are overspending each month:
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