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TipsForSuccess: "How to Spend Money"


How to Spend Money to Make Money

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

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 over $2 million during their working years with intelligent spending. Another married couple, with a similar income, have no savings when they reach their 60s because they never knew the princple 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.

Bean Theory Examples

You buy a $2500 stereo system with a credit card. The stereo 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 1200 beans or less. Bad spending.

You buy a small old house. You pay $25,000 as a down payment and a home loan for $75,000. You invest $25,000 in upgrades and repairs. Over three years, you pay $13,000 in interest. You then sell the house for $160,000. For 25,000 beans for the down payment, 25,000 in repairs and 13,000 beans in loan interest, you get 22,000 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. Total profit of 58,000 beans. Good spending.

If you own a business, some employees' pay may be good Bean Theory application. They do more than expected 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 be shut down ASAP.

Good business spending includes training, computers, office furniture, signs, efficient work spaces 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 marekting ideas, exotic "business" trips for you and your family, unearned bonuses to buddies, golf club memberships and so on.

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 you pays off during your entire lifetime. Brilliant spending.


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

For example, you might decide you are wasting too many beans on expensive restaurants meals or luxury cars; no beans come back. Or you might find your golfing hobby actually pays back many beans with the new clients you meet.

You might find the money you spend on computer classes have 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 costs no beans at all.

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

Money for electricity, water and gas is vital as no beans are possible without them. Yet, as many people found out this past year, money for a new fancy home that consumes two-thirds of your pay in loan interest, will probably 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.

You spend your beans in ways that give you more beans back . . . and then you invest extra beans in these same ways again.

By doing this, you constantly improve your financial condition.


Before spending your beans, ask yourself, "If I pay for this, will it give me more beans than I'm spending?"

If the answer is "yes," go for it!

If you do not know the answer, wait and 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!

Provided by as a public service to introduce the technology of L. Ron Hubbard to you.

Copyright © 2009 All rights reserved. Grateful acknowledgment is made to L. Ron Hubbard Library for permission to reproduce selections from the copyrighted works of L. Ron Hubbard.

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