Money has never been my strongest suit.
Money has been a difficult lesson for me. Born and raised in a wealthy home I had this misfortune of learning late in life how to spend wisely. Whatever I did learn about the dollar was forgotten altogether when I combined my lack of responsibility and my first credit card.
I was 18 years old at the time, it was great. No more waiting for a paycheck, I could now have whatever I wanted with the swipe of my Visa. Understandably, it did not take long before I maxed out my credit card. I made minimum payments that gave me no progress. In turn I made very large payments, but then I was broke and forced to use my Visa again. Finally I decided to cut my credit card in half and slowly pay it off
Three years later, I did.
And then there was another credit card… and another. Not to mention the loan I took out for a motorcycle. Apparently I did not learn the all too important lessons of money.
Sadly, I`m not alone…
According to the US Census Bureau,
In 2009 credit cards were used to purchase $1.944 trillion dollars in merchandise. An average of $12,461 spent per card holder.
In 2009 the nationwide outstanding debt on credit cards (unpaid balance) was $886 billion dollars. That’s an average of $5,551 in debt. (Census)
And according to the US Department of Commerce,
In December 2011, “The personal savings rate – personal savings as a percentage of disposable income – was 4.0 percent” (Commerce)
In other words, after the bills are paid off and you’re left with money for cinemas and Starbucks,
Only 4% of that money is being saved.
This is bad.
So I decided to take a long hard look at all my finances for 2012 to see how I`m doing so far…
The results are not surprising.
$2,000 of the $2,500 I have made this year are gone. This chart reveals to me where all of that money had gone. Most of which could have been saved.
Ever wonder to yourself how much you’re spending on the daily coffee and occasional burger?
I spent over $600.00 in less than 3 months. At this rate, if I don’t change, that number will grow to $3000.00 by the end of the year.Or 29% of my income... in food.
All being said, I am happy to announce that in a single paycheck I managed to save 7% of all my spending income to this date. A shy $153.00.
I must then ask myself…
How do I get out of this spending frenzy?
- Know where you money is going.
I can check this off my list of things to do. But the principle I got from it must continue. When you have an unbiased view of what your money is being spent on you begin to reevaluate the importance of that extra shot of espresso or the muffin on the side. - Stick with paper and forget the plastic.
You are a slave to what you owe. The card is deceptive; it does not get lighter or shrink in size the more you spend. So carry cash with you wherever you go. That way you know, when you are out of cash you have spent your allowance for the week. - Have a goal and stay focused.
Saving can be difficult with so many fun ways to spend it. So have a goal that you want to accomplish to help you stay focused. Maybe you want to take a trip to Hawaii, or perhaps you just want $500 in your savings account. Stick to the goal and reward yourself when you reach it, just be careful not to overdo it. - Relax, be easy on yourself.
You have been playing this game by the wrong set of rules for years. So don’t expect to be a financial guru overnight. The aim is to be consistent and make small steps towards great savings. If you spend a little over, that’s okay, just pick yourself back up and learn for the next paycheck a head. - Lastly, remember what matters most.
Jesus said, “Take care, and be on your guard against all covetousness, for one's life does not consist in the abundance of his possessions.” To be free of debt and secure is more important than the 50’ plasma or new convertible. Remind yourself to look at the big picture and all the things that truly matter in life. When you do that, adjust your spending accordingly.
Reference:
Census: http://www.census.gov/compendia/statab/2012/tables/12s1188.pdf
Commerce: http://www.bea.gov/newsreleases/national/pi/pinewsrelease.htm
