Money Money Money
Money money money. https://www.youtube.com/watch?v=ETxmCCsMoD0
Think about what you buy in a week. How much of what you purchased did you NEED? And how much of it did you just decide to buy at the last moment or just because it was there in front of you and at that moment you wanted it.
If we want to move towards any sort of financial goals, we need to be more mindful in our spending. Be it thinking twice before getting that half-caf grande latte macchiato or getting yet another pair of black shoes (this time with a cute little kitten heel because everyone knows that it will go with everything and one can never have too many black shoes with a kitten heel). At any rate, I should tell you, I am rather gifted in justifying pretty much any purchase. It is my special skill. I have also become quite good at helping others share this skill. I have realized, though, that perhaps not every purchase needs to be justified. Sometimes we need to just not purchase. Sometimes we need to purchase something else. Sometimes we need to think about the examples we are setting for our kids when we buy random useless items.
I’m not going to give you a lecture about making a budget and sticking to it. It’s not at all my place to do that, and honestly, not my forte. I am going to tell you a couple of things, though, that might help you reflect more on what you are spending your hard-earned money on, and perhaps bring you more satisfaction from what you DO purchase. Let’s also think about lessons we want to share with our kiddos about money and spending.
Okay, so let’s talk about the different kinds of costs.
We all have fixed costs. These are the sort that come every month, and are needed to run your life: household costs, utilities, phones, etc. You may not NEED these (do you really NEED that smartphone? Wouldn’t a more basic phone also serve the purpose?), but they serve to make your life run. Heat you need in most parts of the world, and the same applies for food, electricity, and the like. If we have kids, we have kid-associated costs, too, like day care or school, health care, etc. You have snack costs, and peace-of-mind-in-the-car costs. Some of these might seem like an unnecessary perk but only to those who don’t know what your child is like in the car or if she might have to be without her Fruity chews.
We have the Big Picture costs. These are the ones usually associated with a life change: starting a family, buying a house. Buying a car. Urgent? No. But important and one you need to think about. These costs are often something you can put off, but the price may be higher eventual prices. These are often costs that wherein outside advice might be a good idea. Partly because it would be very challenging to see the other side of this equation, and also because these big picture costs are just that, big, and they will have implications on every part of your life so it’s best to go into these decisions with your eyes wide open.
We have WANT costs. These are not urgent, but are actually important … unless you can change your focus. You WANT to have that midday coffee every day, you WANT to have that bi-weekly manicure, you WANT to buy your one glass of wine at the stop on the corner during your weekend dog walking excursion. These costs are often feel-good spending, and can add up quickly. Often, these are the sorts of costs that contribute to mental well-being, but can also end up making you feel guilty. Cutting them all might make you rebel; keeping them all will keep your wallet load continually diminishing.
We have mindless spending costs. This is the stuff you don’t need, you don’t even think you want but there you are at the grocery store and wow, didn’t know that we had six different flavors of Oreos. Why not try them all? Do you need them? Absolutely not. Will you be fine without them? Absolutely. Does it make you feel good to have them. Meh. But … the money is spent, that quickly. Impulse shopping can really add up quickly.
These are all costs with which you are familiar. Are there any of these costs you can do without? Are there any of these costs that are life changing?
A couple of thoughts:
Think about it before you buy: do you? I mean really, do you think about what it is you want to purchase and whether or not it is in line with your goals and values? Does (will) it bring you joy? And not just look-at-my-shiny-new-bauble joy, but the real kind that lasts? I know you WANT it, and I know you can tell yourself you NEED it, but … do you really?
Just because it is on sale does not necessarily mean it is a good buy. And, further, just because it is on sale, and is a good buy does not necessarily mean you need it right now. Don’t jump on a big purchase just because it happens to have a visually smaller price tag right now. Ask yourself the same questions above, and determine if this is indeed something you need right now.
This is something I tell my kids all of the time: just because so-and-so has one, does not mean we need one. We do not/not keep up with the Joneses. We talk a lot about lifestyle choices and decisions that are in line with our values. We prioritize things like taking family trips over little tchotchkes, and we give one meaningful experience over a dozen little gifts. We don’t have the latest/newest/greatest (insert tech device here), and we are okay with that. So. For you: just because your friend/neighbor/co-worker has xyz, do you also really need it?
Do you write down your savings goals? And put them in a place where you can regularly see them? Do you regularly reevaluate them to ensure they are still in line with the other pieces of the pie? Savings goals are not stagnant; they should morph and change as your life ebbs and flows.
A couple of specific lessons for kids:
Do you have a way to help them save wherein they can SEE their change (probably literally) piling up? Even a glass jar is better than nothing.
This may sound simplistic, but your kids need to know that things cost money. Especially in this day and age of online shopping, it’s hard to really grasp the cost of something. Make a habit of making your kids pay for their wants. Make them actually get it out of their aforementioned jar, take it to the store, and hand it over. Not only will they get some satisfaction from earning their own goody, but this lesson will be much more valuable than your best version of ‘Spending lessons for kids’ (yes, even if you have slides and snacks).
Help them understand the costs of things beyond the price tag. If they buy one thing, they won’t be able to buy the other two. Part of this is budgeting, sure, but it is also an important part of learning how to prioritize spending.
Yes, you can and should save for their college years. BUT so should they. Your kids should take ownership of their college education and part of that is footing a piece of the bill. Be it their spending money, their book and supply fees, or their food, they should be contributing to their higher education in more ways than just studying hard and getting good grades.
Teach them the danger of credit cards. Credit cards are both a good thing (Free airline miles! Extended warranties! Car rental coverage! Convenience!) and a horrible thing (Fraud! Huge personal debt! Interest!). The trick is to understand (and use) the benefit without falling prey to the bad aspects. As soon as the leave your house (and maybe even before), your child will be inundated with credit card applications. Free money! Woohoo! Except … it isn’t. Help them navigate the system without falling into debt.
Beyond spending habits, let’s talk about incomes. Very often, the only limiting factor to our making financial progress are our own limiting beliefs about money. Especially women fall into these traps. From accepting far-too-low salaries to a willingness to work for free (my bad habit) to underestimating our worth, we don’t get the pay that we should. If we don’t have the income of funds, then the out-go of funds will always exceed and inevitably cause a deficit.
Don’t be your worst enemy when it comes to spending and earning. Smart financial decisions are important. Mindful spending can help you create a budget that matches your values and helps you to meet your financial goals at the same time. And, best of all, will help you set an amazing financial example for your kiddos so that they too can grow up to be money geniuses!