Consider This Your Permission to Spend More Money in 2022
Inflation and other factors likely mean you’ll spend more in 2022. Here’s why that’s OK.
Inflation and other factors likely mean you’ll spend more in 2022. Here’s why that’s OK.
Here’s a prescription for money happiness in 2022: Accept the fact that you’ll likely spend more money than you did in 2021.
With inflation driving up the cost of food, rent and more, pressures are mounting on our wallets, so expecting your spending to stay in line with the past year is both unrealistic and a recipe for feeling guilt and self-recrimination. The key, financial planners and researchers say, is thinking ahead about where that extra spending will happen and quieting the voice in your head comparing your expenses from one year to the next.
“What’s going on right now that is so crazy is that no one even has an idea of what the baseline should be. The past may or may not be relevant to the future,” said Abigail Sussman, associate professor of marketing at the University of Chicago who studies how consumers make judgments.
Financial experts advise that future budgets allot more to needs, such as higher rent, as well as wants, such as travel. Here are some ways to do just that.
Keep on Saving
You may have saved a lot of money in the past year, thanks to a strong labor market, rising wages and record-high savings rates. You can save more in 2022.
Adding more to your existing savings can calm a lot of fears people may have about spending more money in other expense categories, said Sarah Behr, financial planner and founder of Simplify Financial in San Francisco. As you’re watching that savings account grow, you can relax knowing that should catastrophe strike, you have a cushion.
Check in on your savings progress from the previous year. Are you happy with the amount you set aside? Do you want to increase your savings rate or maintain the current one? Even as you expand your budget, save first before spending on other things. You can set up regularly scheduled withdrawals to automate the process and eliminate stressful decisions.
Stop Thinking in Dollars
Having frugal habits helps ward off lifestyle creep. Yet you may be hanging on to outdated ideas about how many dollars to spend in different areas of life. The past two years may have reduced your spending on travel, going out and entertainment, but those circumstances aren’t permanent.
Spending more money than you have previously can lead to feelings of shame or embarrassment, Ms. Behr said. She’s previously talked to clients who have moved up from meagre means and struggled to adjust to the new latitude more money affords them.
“I’m the one saying, ‘Whoa, whoa, whoa, you can afford to go out to eat, you can afford a new car, you don’t have to drive your 2015 Prius,’” Ms. Behr said. “[Clients] are saving, and they’re squirrelling away, but there’s no change in perspective.”
Malik Lee, a managing principal and adviser at Felton & Peel Wealth Management Inc., recommends looking at budgets in terms of percentages of your overall income, rather than dollar amounts.
He points to the 20-30-50 model, a tenet of personal finance that encourages putting at least 20% of your take-home pay into savings; allotting 30% for “wants” like travel and socializing; and designating the final 50% to fixed expenses such as housing and bills.
“Thinking in percentages of income makes this a lot easier, and it makes it flexible,” Mr. Lee said. “As you’re increasing your income, that will ensure that your savings will increase with that, and the other ‘good’ categories will increase, too.”
Pick Your Splurges
Most of us have practice downsizing budgets and cutting expenses. Fewer of us have spent time planning what we’ll spend more on, especially in terms of luxuries like travel or entertainment, what Ms. Sussman refers to as “pre-committing to indulgence.”
This doesn’t mean splashing out on everything, but thinking carefully about the spending that will have the most positive impact, such as setting aside money for a long-awaited vacation.
Instead, consider the spending that brings you the most satisfaction, such as vacations, home-fitness equipment or some other priority. Allotting more money to items like those can make your budget feel rewarding, Ms. Sussman said, so that when you’re making trade-offs in other areas of your life—like cutting back on going-out expenses to put more toward your new, bigger apartment—it feels less like a loss and more like a pivot.
Allot money to those savings goals—“I’ll spend more on travel in 2022” or “I want to save for a bigger apartment”—by creating a separate bucket for these funds. Name it something fun in your preferred budgeting app or spreadsheet. This way, as you’re watching the money grow in the account, you can sprinkle some extra anticipation on the future fulfilment.
Last, a Piece of Advice
Whichever budget works best for you, Ms. Behr warns against measuring your own spending or saving against peers’.
“A lot of people ask me, ‘Do we spend too much money?’ or ‘How much do other people spend?’” she said. Worrying about spending is natural, but comparing the size of your savings with others is often unproductive, she added. “It’s like that old saying: ‘Comparison is the thief of joy.’”
Reprinted by permission of The Wall Street Journal, Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication: December 30, 2021.
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Amazon, Google, Microsoft and Meta pour billions into artificial intelligence, undeterred by DeepSeek’s rise
Tech giants projected tens of billions of dollars in increased investment this year and sent a stark message about their plans for AI: We’re just getting started.
The four biggest spenders on the data centers that power artificial-intelligence systems all said in recent days that they would jack up investments further in 2025 after record outlays last year. Microsoft , Google and Meta Platforms have projected combined capital expenditures of at least $215 billion for their current fiscal years, an annual increase of more than 45%.
Amazon.com didn’t provide a full-year estimate but indicated on Thursday that total capex across its businesses is on course to grow to more than $100 billion, and said most of the increase will be for AI.
Their comments in recent quarterly earnings reports showed the AI arms race is still gaining momentum despite investor anxiety over the impact of China’s DeepSeek and whether these big U.S. companies will sufficiently profit from their unprecedented spending spree.
Investors have been especially shaken that DeepSeek replicated much of the capability of leading American AI systems despite spending less money and using fewer and less-powerful chips, according to its Chinese developer. Leaders of the U.S. companies were unbowed , touting advances in their own technology and arguing that lower costs will make AI more affordable and grow the demand for their cloud computing services, which AI needs to operate.
“We think virtually every application that we know of today is going to be reinvented with AI inside of it,” Amazon Chief Executive Andy Jassy said on Thursday’s earnings call.
Here is a breakdown of each company’s plans:
Amazon said a measure of its capex that includes leased equipment rose to a record of about $26 billion in the final quarter of 2024 , driven by spending in its cloud-computing division on equipment for data centers that host AI applications. Executives projected it would maintain the fourth-quarter spending volume in 2025, meaning an annual total of more than $100 billion by that measure.
The company—which gets most of its revenue from e-commerce and most of its profit from cloud computing—also projected overall sales for the current quarter that missed analysts’ expectations. Its shares slid about 4% in after-hours trading Thursday. The stock rose more than 40% in 2024 and was up nearly 9% this year before its earnings report.
Jassy said AI has the potential to propel historic change and that Amazon wants to be a leader of that progress.
“AI represents for sure the biggest opportunity since cloud and probably the biggest technology shift and opportunity in business since the internet,” Jassy said.
Google shares are down about 7% since its earnings report Tuesday, which showed disappointing growth in its cloud-computing business. Still, parent-company Alphabet said it is accelerating investments in AI data centers as part of a surge in capital expenditures this year to about $75 billion, from $52.5 billion in 2024. The spending will go to infrastructure both for Google’s own use and for cloud-computing clients.
“I think part of the reason we are so excited about the AI opportunity is we know we can drive extraordinary use cases because the cost of actually using it is going to keep coming down,” said CEO Sundar Pichai .
AI is “as big as it comes, and that’s why you’re seeing us invest to meet that moment,” he said.
Microsoft has said it plans to spend $80 billion on AI data centers in the fiscal year ending in June, and that spending would grow further next year , albeit at a slower pace.
Chief Executive Satya Nadella said AI will become much more extensively used , which he said is good news. “As AI becomes more efficient and accessible, we will see exponentially more demand,” Nadella said.
Growth for Microsoft’s cloud-computing business in the latest quarter also disappointed investors, leaving its stock down about 6% since its earnings report last week.
Meta, too, outlined a sizable increase in its investments driven by AI, including $60 billion to $65 billion in planned capital expenditures this year, roughly 70% higher than analysts had projected. Shares in Meta are up about 5% since its earnings report last week.
CEO Mark Zuckerberg said investing vast sums will enable it to adjust the technology as AI advances.
“That’s generally an advantage that we’re now going to be able to provide a higher quality of service than others who don’t necessarily have the business model to support it on a sustainable basis,” he said.
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