Why do you seem to never have enough money? I’ve been asking myself this question most of my adult life. The question often came in moments of exasperation, like when I wanted to buy something but didn’t have the money to do so. It wasn’t until I found myself in a job that should have been providing well for my family, but yet I still faced the same old money troubles, that I looked at the real reasons I never seemed to have enough money. These are the behaviors I found were sabotaging my family’s financial well-being. Might they be sabotaging your finances, too?
Buy on impulse
My whims ruled my spending habits. I couldn’t save money because I was mindlessly blowing money on Starbucks and budget bin records. I often saw something cool and convinced myself on the spot that it’s what I needed: “How could my day be completely without another Venti coffee from the ‘Bucks? Or how could my record collection be complete without this copy of ‘Fresh Fruit for Rotting Vegetables’?” These impulse buys added up to quite a sum of money–a sum that was keeping me from my financial goals.
What to do about it: Impose a 24-hour or one-week rule. If you still want the item after 24 hours or one week, then figure out how to purchase it within your budget. When shopping, don’t buy things not on your list. For me, it means not stopping at Starbucks just because it’s right there.
Keep paying someone else
“It’s just so convenient to pay someone else to change my oil.” It also costs twice as much doing it myself. Same for washing my car. Or painting a wall in my home. The more I paid out to someone else, the less I had for myself. Pretty simple principle.
What to do about it: If you can do something yourself, then do it yourself. You’ll save some serious cash and get the ego boost that accompanies self-reliance.
Spend it and forget it
I was taking my item to the register, plopping down my debit card, completing the transaction, then going on with my day without another thought about the money spent. No accounting for where that money came from. Nor how it fit into our family budget. Just buying and going. I needed to begin considering how every dollar I spent fit into my family’s plan for financial well-being.
What to do about it: There are many options. Some people use cash and envelopes. Or they use virtual budgeting envelopes through an app. I built a really simple app that interfaces with a Google sheet that tracks how much discretionary money we have each month. I appreciate that I need to consider how each purchase affects my family’s budget.
Deferring payments really came as a result of not tracking my finances. And it presented like this: I got new tires because I desperately needed new tires. When paying, the tire store said they offered a payment plan. Understanding that paying for all four tires at the present moment would make finances tight, I took the payment plan. The problem is that instead of making things tight for just one month, I’ve stretched this strain out over several months–and likely incurred additional finance charges.
The bottom line with deferred payments is that they are not in your best interest. Service providers offer deferred payments because they present a chance for them to make more money (most of the time). They are not set up to save you money. You won’t make your financial life easier by putting off paying for something.
What to do about it: Avoid deferring at all costs. Figure out a way to pay for everything up front. For luxury items, the means if you don’t have the money for it now, you can’t buy it. For necessities, it means dipping into savings–those finance charges are going to outweigh that money sitting in the bank. A large surprise medical expense may demand some deferment, but work on paying that thing down ASAP.
Keep using your credit card
This is really just another way of deferring payment. When you use your credit, you’re simply delaying the pain of having to pay for something. And, actually, you’re compounding that pain by adding the cost of finance charges and interest to your payment.
What to do about it: Stop using it the credit card. Now.
Undervalue your time
Every purchase you make represents a portion of your life because you invested time in earning the money you’re now spending. So the $50 shoes you’re about to buy might actually represent two full hours of on the job time. Are those shoes worth 5% of your work week?
What to do about it: Know how much your time is worth. I wrote a whole other blog post about calculating your real hourly wage in order to understand how much you’re truly bringing home for the time spent at work. Know that value and what that means for your purchases.
Don’t keep a budget
Yeah, it’s work. For many of us, it’s boring. But it’s so necessary. If you don’t control that money, your money will start to control you. So figure out a budget. See how much you’re making, how much you’re spending, and where you can and should cut some expenditures. It’ll be grueling to begin, but worth it in the long run. So worth it.
What to do about it: There are some budgeting apps, like Mint, that make the process much less painful. Or, you can tackle it the old-fashioned way (that’s what I did), and open up a spreadsheet and your bank account statement and go line by line in tracking what’s coming in, what’s going out, and what category everything falls into.
What else have you observed regularly sabotaging your finances? Share your thoughts, too. I’d appreciate the added knowledge.