Q: I was talking to a friend theother day, and I couldn’t remember what you said about the three good uses for money and why each is important. Would you go over them again?

A: I’ve been doing this for a lot of years, and after all that time studying finance and teaching people about money, I can still find only three good uses for money – spending, saving and giving. You should be doing all three while you’re working your way out of debt and toward wealth, and after you become wealthy.

The kid in us likes the spending part of this equation, because it’s so much fun. The problem with most people is they can’t really afford the fun they have. You should have some fun no matter where you are on the financial scale, but it should be inexpensive fun in the beginning. Then, the fun can get bigger, better and more frequent once you’re out of debt and building wealth.

The grown-up part of us likes investing and saving, because that’s what can prepare you for retirement and make you wealthy. After a while, though, investing can feel a little bit like Monopoly. You can be up, or you can be down. Sometimes the market fluctuates, but a mature investor will ride out the waves and stay in for the long-term.

If you have quality investments with long track records of success, they will come back up. Start investing 15% of your income for retirement once you’ve paid off all debt except for your home and you have three to six months of expenses saved for an emergency fund.

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