How to Spend Money to Make MoneySpend money to make more money

Spending money is a skill. You can spend with intelligence or stupidity. You can use your money to increase your financial worth or you can waste it.

Businesses that spend money intelligently make more profit. Their employees earn higher salaries and their customers get better service. Businesses that spend money foolishly cannot afford top employees who produce high-quality services or products.

Your personal spending habits can make you rich or poor. For example, a married couple accumulates more than $2 million during their working years with intelligent spending. Another married couple, with a similar income, have no savings when they reach their 60’s because they never knew the principle that is covered in this article.

The way to spend money to make money is by 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. Your wealth grows.

Bean Theory Examples

Example #1: You buy a big $2500 TV stereo system with a credit card. This incredible system makes you no money and loses value over time. You pay $2000 in interest over five years before you pay off the credit card debt. For 4500 beans paid out, you get no beans back and have an asset worth 200 beans. Bad spending.
However, if you delay buying that TV stereo system until you have the cash, you may discover the price has dropped. If instead of buying the system you invest that money for a few years, you might even pay for the system with your investment returns. You might even discover you like having a growing savings account and are happy with your iPad and headphones.

Example #2: You buy a small old house. You pay $50,000 as a down payment and get a home loan for $275,000. You invest $50,000 in upgrades and repairs. Over three years, you pay $36,000 in interest, insurance and fees. You then sell the house for $460,000. For 50,000 beans for the down payment, 50,000 in repairs and 36,000 beans in loan interest, you get 49,000 beans after the loan is paid off. You also lived in the house for three years which saved you 12,000 beans in rent per year. Good spending.

Example #3: You spend $125 to learn how to create websites. You enjoy the work and create some brilliant examples. Your friends ask you to help them and through word-of-mouth, you are soon earning an extra $2000 per month. Your 125 beans return thousands of beans back to you each year.

More Examples

Money spent to improve your knowledge, make you more competent or improve your skills, usually pays off from 100 to 1000 beans earned back for each bean spent. Investing in YOUR PERFORMANCE pays off during your entire lifetime. Brilliant spending.

If you own a business, some employees’ pay may be good Bean Theory application. They do more than you expect and add to the success of the business. Good spending.

Other employees do less than the others and try to suck everyone down to their unhappy existence. They are not a good investment of beans. Bad spending.

Each part of your business can be classified as good or bad spending. For example, an auto repair shop has several departments. Its auto paint department returns five beans for every bean paid into it. But its muffler department only returns one bean for each two beans it receives. If the owners are smart, they invest more beans into the paint department which increases their beans. The muffler department must either become profitable or sold off ASAP.

Good business spending includes training, computers, advertising, efficient workspaces and so on. Spending beans to find the best employees, train employees or pay your highest producers top wages is also good spending.

Bad business spending may include original oil paintings for your office, wild unproven marketing ideas, exotic “business” trips for you and your family, unearned bonuses to buddies, golf club memberships and so on.

How to Spend Your Personal Beans

Go through your spending records, such as your checkbook, and decide which expenses are good spending and which are bad spending.

For example, you decide you are wasting too many beans on expensive restaurants meals or luxury devices; no beans come back. Or you might find the money you spend on tennis equipment actually pays back many beans with the new clients you meet.

You might find the money you spend to advertise your side job has already returned ten times more beans than you spent, while your yoga classes have returned zero beans back.

Junk food is a waste of beans. A health club membership might give back beans if it makes you more productive, but jogging down the street is free.

Money spent on how-to books often returns a lot more beans, while expensive seminars may be money down the drain.

Beans spent on transportation is essential for many jobs, but the beans spent on a new car every few years loses you beans. Money spent on a barely used car, taking exceptional care of the car, and driving it for 10 years, is better spending.

Money for electricity, water and gas is vital as no beans are possible without them. Yet, as many people have learned, money for a beautiful, new and expensive home can consume two-thirds of your income. Because of interest, commissions, taxes and other fees, the house may not return more beans than you pay out.

If you think and carefully spend your beans wisely, you stop wasting beans on things that have no return.

Spend your beans in ways that give you more beans back . . . and then invest those extra beans in these or other ways that return more beans than you spend.

By doing this, you constantly improve your financial condition.


Before spending your beans, ask yourself, “Will this return more beans than I’m spending?”

If the answer is “yes,” go for it!

If you do not know the answer, research the matter until you know.

If the answer is “no” or “probably not,” don’t waste your beans.

Keep this up for months and years and you’ll find yourself sitting on a big pile of beans!