Don't tell me where your priorities are.

Show me where you spend your money and I'll tell you what they are.


-James W. Frick





Plan YOUR work! Work YOUR Plan!

Friday, August 6, 2010

What is your financial bad habit?

We all know there are things we should and shouldn’t do with our money. Things that we shouldn’t do usually play a role in setting us on the path for a financial disaster. For me, my bad money habit is those” oh well” moments. Those times when I think, “well I deserve these $175 shoes or buying $450 cell phone when the one I have works perfectly fine.” I don’t need those things, but I want them and sometimes I convince myself that I NEED to have those things or I’m not going to be ok.

Clearly, I know better and sacrificing all the time is no fun, but impulse buys can be dangerous. Usually I am great with money and don’t let my wants control my actions but I am not perfect. I have a secret too, sometimes I buy expensive things I don’t need on… dun dun dun… credit. How could I be so swayed by the allure of things? Simple, buying stuff we want is fun and makes us feel better.

Along with buying things I clearly don’t need, I usually have terrible “buyer’s remorse”. I feel so bad after buying stuff, even things that I need, that I can’t enjoy what I bought. Usually as soon as I walk out of the store it hits me. But, I never take anything back. I just go home and sulk...with my new stuff.

I know I am not the only one who experiences this need for instant gratification. It’s part of who we are. We want what we want, when we want it. Sadly, this often leaves us paying for our impulsive decisions financially.

Growing up, my mom would ask me if the item I just had to have was a want, a need, or a need-to-want. Most often, it was a need-to-want because I wanted whatever it was so bad that I convinced myself that I needed it. Obviously, I never overcame this need-to-want syndrome but as I have gotten older, and hopefully wiser, I have developed some ways to trick myself into either waiting to buying something or not buying it at all. It hasn’t been an easy road to recovery, but I think I’m on the right track.

Here’s how to beat the Need-To-Wants:

• Each month I set aside a certain amount of money, let’s say $200, that I can spend anyway I want. Instead of rushing out to spend the money right away, I keep the money in a separate account and let it add up. If I have something in mind that I know I will be wanting in the future, I simply save up the money. For instance, I love sneakers, more specifically Air Jordan’s, and this Christmas the Retro Air Jordan 11 “Cool Grey” is coming out. So, I’m saving up for those. (If anyone wants to buy them for me so I can save my money to pick up some other sneakers, feel free.) No regret, no impulse buy, no problem. And I will have my shoes. The money is set aside for the purpose of buying those exact shoes. Since the money is set aside I won’t be taking money from something else more important.

I do this for vacations, car repairs, big purchases or holidays. You can set aside money for anything really, just remember to save up to keep the impulse buys away.

• Another method to avoid the impulse buy is to set a time period that must pass before I can buy something over, say, $150. Personally, my time period is 2 weeks and even then I debate whether I really need the item or not. Most times, the time period allows me to realize I don’t need another gaming system or whatever it may be.

This doesn’t mean if something is $140 that you shouldn’t take the time to think over the purchase. Every purchase should be given time to marinate. Think of it this way…the more it costs the longer the marinating period should be.

Now say, its Christmas time and I just learned some shoes I want are coming out and I have already spent all my money on presents for everyone else. I know the shoes will be anywhere from $175 -$200 and will be around longer than just Christmas time. So I have to wait the 2 weeks. If I still want the shoes after the time passes, I let myself get them. By this time I should have set aside some if not all of the money to buy them. Again, the money is there and no buyers remorse.

Making myself wait allows me to think over the purchase and decide if I really need it. In this case, YES I DO! Hopefully, I have thought over the purchase and am able to make the decision based on logic rather than impulse.

• I have a special rule for clothing. If the item is like something I already have or have several of, I pass on the item. I don’t need a closet full of the same things just because I like them. I try to focus on the essentials, which for me are white tees, t-shirts, jeans, and shorts. Other than that it has to be something to set off what I already have or I don’t buy it.

• The most important tip I have for impulse buys is: DO NOT BUY IMPLUSE BUYS ON CREDIT. If you do not have the money to buy something, chances are you don’t need it.

Take control of your spending habits, learn to distinguish between your wants and needs, and save for what you want. Life doesn’t have to be all about saving, saving, and more saving. You can have the things you want too.

So, what’s your financial bad habit?

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