You must keep track of your financial situation and whether or not to change your thinking toward spending. Have you ever received advice from a friend that was so clear it bordered on being insulting, despite their good intentions? You will now experience that feeling once more. Not being aware of exactly how much money is coming in and going out is one of the most frequent financial blunders. This is a paycheque-to-paycheque way of life.
This usually leads to little savings, expensive debt that is debilitating, and sad, stressful life. We must all strive to live within our means. The sooner you let go of past financial mistakes, the sooner you’ll be able to change your thinking toward spending, even though you might not feel ready to face your finances just yet.
There is a well-known saying that goes like this: “The reason the wealthy are wealthy is that they live like the poor. Because they behave like millionaires, and the poor are impoverished.
I’ve advised numerous “underemployed” persons over the years. They were capable, serious, and intelligent, but they continued to work at jobs paying less than they could make. Their potential was being underutilized. They may be far richer than they now are. They required encouragement as well as someone to tell them that. Do it better if you believe you can. If you can earn more money, don’t stay in a low-paying position. Although more difficult, increasing your income is achievable. Making sensible financial decisions is easier.
There are various reasons why we spend money, many of which are not good ones. We buy things out of habit. Because we are bored, we waste money. Due to peer pressure, we make purchases. Although consumer spending drives our economy, do you need to spend everything you have? Many people utilize credit to make pricey debt by spending more than they make.
To make significant changes to our connection with our own money, we must assess, track, and evaluate. Someone once admitted to me that she made rash financial decisions because she believed her money would quickly run out, like ice melting, if she didn’t spend it. She was never wealthy. Her parents were never wealthy. She was raised in a quick-spending household.
Setting up a spending diary would be the first thing I would do with a client. A sincere one. I ask them to keep track of every penny spent each day for a month. Every coffee, every candy bar, rent, gasoline, buying food’ groceries, cigarettes, the LCBO/Beer Store, everything. Every time they spent ANY money, they recorded it on a little notepad that they carried along. They couldn’t just keep the receipt, I said. As quickly as possible after the transaction, I want them to record the purchase and the price. All the time.
Every time they spend money, I wanted them to pause and pay attention. They should feel “holy sh*t. I just made another purchase.
One young woman I knew, who had a low salary, spent about $400 a month on fast food. She was clueless. Others I am familiar with spending $150 a month on coffee. At home, a decent cup of coffee costs roughly five cents. It costs $2 outside the house.
I am aware of another couple that makes a fair living but is perpetually broke. Why? They frequently ate out or ordered takeout because he can’t cook and his wife despises it, so I later learned. Do you know that if you waste $27.40 a day on unnecessary purchases, you will have spent $10,000 in a year? What is the answer to this problem? Budget, what a horrible word.
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