Do you compare your financial situation to other people?
People tend to be so closed off about their personal finances, and I get it. Money is a private thing. What people make and what they choose to do with their money is none of my business.
But personal finance is so freaking interesting to me!
It is absolutely not about what you make but what you do with what you make that matters.
I’ve known people from all different financial backgrounds, and you would have a hard time guessing which one has their finances together and which one is a hot mess.
In many cases, it’s the people who have money that look like they don’t and vice versa. And for me it’s so hard not to wonder what people are doing with their money to afford: large extravagant houses, fancy vehicles, gorgeous boats, vacations to exotic locations, etc. and it makes me wonder if they truly have the money for it, or if they are in debt up to their eyeballs?
I love to spend, frugally
I can find any excuse in the book to spend. Whether it’s for something I need. Something I think I need. Something I’ve convinced myself I need. Or maybe I just feel like shopping.
Whatever the reason, we as a society like to spend. I know I’m not alone.
And retailers know it! They have become so darn good convincing you that you need to buy something.
People inherently have FOMO: Fear of missing out.
- “I can’t not buy this.”
- “What If I can’t find a deal this good again?”
- “How could my child live without this toy?”
- “The neighbors down the street just bought one.”
I pride myself on budgeting and money management. I’d even go so far to say that I think through every purchase and rarely make impulse buys.
But is that really true? I think in my mind it’s true, but let’s review my actions:
- Running to Kohl’s or using the Kohl’s Drive Through technique to ensure my Kohl’s Cash doesn’t expire. I only had $10 Kohl’s Cash but somehow I managed to spend $50 on things I don’t need.
- I have a coupon for Ben & Jerry’s ice-cream sandwiches. Sure it’s something I wouldn’t normally purchase but they are on sale, and I have a coupon and they look delicious. Never mind they aren’t on my shopping list and my waistline certainly doesn’t need them.
- The emails I am bombarded with daily touting specials and offers. Old Navy, Gap, and Banana Republic are all having 50% off sales? Suddenly I “need” something as a direct result of an amazing offer.
These examples are the small things. How about the larger things like homes, cars, boats, vacations, beauty, etc. I know how expensive it can be to be a woman. Between the hair, makeup, waxing, nails, massages, etc. it can add up, quickly. Especially if you’re not paying attention!
And why are you buying these things? Do you really need them? Who are you trying to impress?
Consumer Debt
I recently read an article by USA Today indicating the average U.S. household has nearly $17K in credit card debt, $29K in auto loans, $50K in student loan debt and $182K in mortgages.
U.S. Average household debt
Wowza!
Look at that credit card debt! What was so important that you “needed” to buy to put you in debt $16k? I understand emergencies and that things out of your control can affect your finances. Sometimes financially it feels like the world is just trying to keep you down. But for others, it seems as if they are entitled to things they can’t afford and have a limited concept of how much their charges here and there add up.
When I think debt or what contributes to debt, I think of the big things. Spend more than your means on house or car and you will definitely feel it in your finances.
But I also see it every day with the little things as well. From people all around me, including myself.
Do you really need that?
The hypocrisy of whining over debt but then hitting the mall, Amazon, Starbucks, lighting up a cigarette, going out for lunch or happy hour, etc. is confusing to me.
It’s not just the big things. The little things add up too!
Are you a spender? Do you open your wallet for a dollar here, two dollars there and don’t think anything of it? How much would those small amounts add up to weekly? Monthly?
Tips to curb spending
The frivolous nature of our society is crazy! I grew up with my parents telling me money doesn’t grow on trees.
Has it magically started to? Because I’m surrounded by friends, neighbors, colleagues, and family that make it seem like it does. I said something to Nick about “money growing on trees” the other day talking to him about this blog article and he said, “No Stephanie, debt grows on trees.”
He has a point. Once you’re in credit card debt, it may seem hard to get out. So rather than taking one small step forward to start tackling a larger problem, you keep watering the current problem.
Tips to get yourself to think twice before buying:
- Ask yourself: Am I going to be glad I bought this in a year? Am I going to be glad I bought this in a month? I don’t know about you but the amount of things I have in my house, basement, closets, etc. with either tags on them or not being used is insane. So no, a year later, or even a month later, I wish I had not purchased.
- Track your spending – daily. Literally, add up every single cent you spend every single day. Once you have a sense for how much you are spending frivolously, it may make you think twice about reaching for your wallet. Tracking will also help you identify areas where you could easily cut back. (I think Nick and I should do this and look at craft beer and eating out. I think we’d be surprised!)
- Use tools to help on your way to financial freedom. I use Personal Capital – one of my personal faves to keep all my finances in one spot and to easily see how my accounts fluctuate over time. Each job I’ve had has had a different 401K provider so in order to check balances, I’d have to log into three accounts. This app allows me to see my full financial picture in one snapshot, which keeps me motivated to continue saving.
You don’t have to keep up with anyone other than yourself. Focus on your spending. Your savings. Your financial goals.
Take one small step today – to help your finances tomorrow,
Steph
