During a recent family outing for dinner (thanks to a free birthday coupon), a man approached us asking for some spare change so he can get something to eat for the night.
I told him I didn’t have any change on me, but I would buy him a meal at Rubio’s since that’s where we were going. Surprisingly, the man told me he would rather eat at Panda Express and went on his way.
How ironic for someone to be in need and hungry, yet be so picky. Even though I laughed at that situation, I can’t help but realize that many of us, especially myself, are in the same mindset when it comes to our finances.
I sometimes feel discouraged that there’s not more wiggle room in our budget. But if I only took a closer look at my expenses, I would’ve noticed that there are a lot of little extras I could cut out. If I really needed to, I could completely makeover my grocery budget to include simpler meals. I would have to admit that my love for Starbucks’ green teas (which can be made for pennies) is not helping my finances though.
I’m just like that man asking for money. I don’t want to give up my wants and comforts to get what I need. I don’t want to give up my Starbucks’ teas or variety in my grocery shopping to add a little extra to my savings account each month. How ridiculous does that sound?
I have a feeling this is a universal problem too. I’ve had many people complain to me about their state of financial trouble, but it turns out that they were really the source of their money problems upon closer examination
One mom I know always laments about how she wishes she could stay home with her kids but she doesn’t want to give up her $100 a month smartphone plans or trendy wardrobe. She doesn’t even want to entertain the idea of changing her cellphone carrier when I suggested to her that she can basically get the same cellphone service for $30 a month. I know another friend who has issues paying all the bills but he isn’t being proactive in selling the huge truck (and payment) that doesn’t fit his lifestyle. Between the extra gas, higher car payment, and higher insurance cost, he could easily cut out $500 a month if he only sold his truck and bought a smaller vehicle to get around. We all know people like this, and I am sure most of us fit into this category at some point or another.
Here are my three tips to stop being our own financial enemies.
- Get Real With Your Needs vs Wants: Strip down your budget to the bare needs. Only include things you need for survival. Make doubly sure that the list only has needs and not anything that’s for comfort but disguised as for survival. A few years back I wrote about saving money by getting rid of cable and I had so many people comment saying how they needed cable for this or that reason. Let’s be honest here. Unless your cable is hooked up to your oxygen tank, you don’t need it. Not being able to watch your favorite sports team throughout the season would be painful, but you aren’t going to die without it. You might even find yourself having more time to be more productive. Being tough with ourselves is sometimes necessary for us to figure out what has to be cut for our budget to work.
- Have a Plan for Survival Mode: Life happens. Whether it be unexpected expenses or an unexpected job loss, have a survival mode plan ready beforehand. It’s important to implement this plan in dire situations so you can still stand on your feet at the end of the day, month, or several months, depending on how long the dire financial situation is. I watched my in-laws at the time having to short sale their home and go through bankruptcy, but you wouldn’t know it because they lived and ate lavishly up until the very end. They had plenty of time to adjust. They had years in fact, but they never bothered to prioritize their lifestyle and they ended up not being able to protect their most important investment – their home.
- Say No Now, So You Can Say Yes Later: I’m not suggesting you always deprive yourself. Instead, use more self-discipline for “comfort” purchases. Saying no to a few minor things now can lead to an opportunity to afford a big yes later down the road. Who knows what my in-laws’ life would be like if they only said no to themselves every once in a while. We like to say that it’s never too late, but they are well into their retirement age and it’s unlikely they’ll be able to work their way to make up for the financial mistakes they’ve made for decades before they declared bankruptcy. I don’t want to end up in a similar situation. You can be sure I’ll be saying no to my Starbucks green teas a whole lot more now so I can reach other short and long-term saving goals.
At the end of the day, no one wants to be unwise like the man asking for money to buy food. I certainly don’t want to refuse a free meal just because I “want” something different.
Don’t become your own worst financial enemy and force yourself into a mediocre money situation because you refuse to give up your wants and comforts.
What are you guilty of holding onto, or indulging in, that might be sabotaging your budget?
{ read the comments below or add one }
I love the statement “hooked up to an oxygen tank”. I could definitely cut back on a few things but I’m happy for now where I’m at. I already live on a limited level of cash. Working for a city isn’t going to make me rich but the long-term money will pay for itself. I learned to live on 1 paycheck and I’m happy with that.
Being happy with what you have is WAY more important than feeling like you need more and more and more. It’s important to save but money isn’t for hoarding after all!
You really need to look at the “scale” of your expenses and generating more income to get ahead.
For expenses work down from the highest cost, housing, transportation, education, phone and cable. Take a serious look at your budget. And you have to think about the future and the “now”. If you’re renting maybe you can downsize when the lease is up, you fix your car rather than a new one or maybe eliminate it if possible. You should strive to save the $100s a month, not the $10s a month. When you need a car you buy used and just what you need, not more.
For income you increase your skills and look for a higher paying job. You should always be on the search for something higher paying. If you can get something on the side that pays well for your time then do it.
Good suggestions. Little expenses add up but it’s amazing how much progress you can make when you just get a few things right.
I would add investing in low-cost index funds and staying the course right up the very top of things people need to do though!
I love the second tip here. While I believe people are getting better about understanding the importance of an emergency fund I think we all too often forget that we need an emergency budget as well. I think it’s also important to have a “fire drill” of sorts by putting yourself on the spending diet or fast that would be required should you need to go into survival mode.
Dave Ramsey teaches that one’s emergency fund is the cushion between u & financial disasters or setbacks. He recommends a min emergency fund of $1000 (if ur income is above 25,000?) & then recommends gradually building it up to at least 3 months of income (if I recall correctly).
Forgot to mention: In the years since my wife & I set aside our emergency fund, it’s provided us w/ a lot of financial peace & helps prevents us from being like the “hungry” guy at the beginning of this column. (I don’t think he was hungry at all.) But the emergency fund has “saved” us from lots of anxiety & headaches.
For Dave Ramsey, it’s the first step toward financial peace & getting ahead financially.
Very helpful and informative! The will to self-discipline those comfort wants, I like that.
The best way I know how to deal with your finances is the appropriate management of them. Of course you can control your spending at every step but in my opinion it isn’t a good idea. A good option is to set some limits of spending money on different needs. In this way, having a predetermined amount of money on the cravings is a lot easier.