We have all made them. We have all spent unwisely and then regretted it later. Many of us have fumbled our way through trying to understand money: how to get it and how to keep it.
Often our understanding of investing was foggy to say the least. Not too many of us learned about proper use and investment of money in school.
Consumer debt is the mal of our times. It is everywhere. It is rare to find anyone who does not have some form of debt (car payments, mortgages, student loans or credit card debt) Most will say that debt is a necessary evil… but is it really? We live in a society of instant gratification: “I need it here and now.” We live in a society where status dictates what we should buy and how we should live. Our children learn that they should pursue an education at any cost. In the end, we become (through consumer debt). someone else’s asset and a liability to ourselves.
Not knowing what money is for is at the root of the consumer debt problem. Money is not for spending indiscriminately on whatever we feel like having or think we need. It is not for accumulating in order to spend. Money is a security, a protection, a stewardship. When we put money in its proper perspective and understand its purpose, then it is easier to manage it well.
Wow! That’s a touchy one! Everyone has their own brand of financial advice to give. But why would we take money advice (for example) from our brother-in-law or our college dorm mate if they are steeped in consumer debt? Are they really the best people to turn to to help us achieve our financial goals?
And what about the experts? It is good to hear to get their perspective , but let’s face it – there is always a monetary incentive to help us out in our planning and our investing, isn’t there? And the real matter is that no one ..no one… will actually care more about your money than you.
Investing in ourselves (ongoing education) is the sure fire way to increase our market potential; it is the best way to multiply (exponentially) our earning potential. This is not an area to ignore or skimp on.
Furthermore, we should put money aside to build upon an emergency fund. The general rule is to have at least 6 months of savings put aside for emergency (not a buy a tv fund) reasons.
The key words here are long term. The power of compounding is that it works amazingly well over time. Remember that compound interest is either working for us or it is working against us. Are we getting richer as we sleep or poorer?
7. Not Starting Early Enough.
The saying goes “it’s never too late.” However, regarding savings, early is definitely better than late. The “magic” of compound interest works exponentially over time, time being the key factor. So the earlier you start to apply savings principles and the longer you do this, the better chances you have of reaping amazing benefits later on.
For those who begin later, it’s not too late, just not as optimal as if you had started earlier. Finally, always trust in time rather than in timing.
Not having a plan is planning to fail. The plan is the very first step in financial investment. Plan, save and invest. And, do this long term! The plan should not just be in your head; it should be written down. We need to regularly inspect our plan and adjust as necessary. As the saying goes, we can’t expect what we don’t inspect.
9. Over Spending on Big Ticket Items and Also Over Spending on All the Little Things.
Over spending on the big ticket items: boats, cars, cottages, skidoos is not uncommon. Do we actually need these? What is the return? Such a lot of money goes into the purchase of these (sometimes) unnecessary items that will only lose their resale value over time. More often than not, these big items are financed over years, which means, of course that we couldn’t afford to buy them in the first place.
Over spending on small items from day to day goes virtually unnoticed so that we end up wondering where all our money has gone and why we never have enough of it. The same rule applies here as to the big ticket items: Do we really need these?
We can keep track (yes, record keeping) of our spending. Try tracking all spending for 30 days. You will be amazed, not only at where your money is going, but also at how much you could have saved.