For some reason, vice always seems to be more fun than virtue– or so it seems in the moment. Regrets come later and, in the instance of financial mismanagement, they may come a lot later– but their eventual effects will be extremely hard to overcome after such a long period of neglect. The solution is to start paying attention to your current state of financial affairs and make some modest but intelligent changes.
One of the main culprits is the inability to set long-term goals and faithfully allocate resources towards the achievement of them. Most people are actually making enough money to realize their dreams but they are simply not directing those resources properly. One big failing is to not tie the concept of saving directly into something they desire– such as an exotic vacation or a new home. Saving for the mere sake of saving loses a lot of its allure when it doesn’t seem to have any tangible purpose.
Another problem that falls into the autopilot category is to not properly track where you are and what progress you are making towards getting to where you want to be. One way of escaping this trap is to schedule a specific date on an a weekly or monthly basis to sit down and really look at your whole financial condition. As you absorb insight, you can slow down on formal sessions but they should never be totally forsaken.
A real deal breaker for financial success is the inability to say no to impulse purchases. Not only are spur-of-the-moment acquisitions a destructive habit to get into, but it is made even worse by the fact that so many of these little indulgences are in the form of items that are of extremely low utility or value in the long run. It is important to keep in mind that every dollar expended is a dollar that is gone so far as its ability to be spent on something of more value.
Of course living beyond one’s means is practically an epidemic all across the Western world. There are a lot of ways of calculating this that arrive at different answers. Most people figure if they make 100 dollars and only spend 99, they are not living beyond their means– but not putting anything significant away for the future tends to obviate this sort of calculation. If you are spending more than half of your income on fixed costs, you have an overhead problem that is going to lead to a severe lifestyle constriction in the future when your income stream starts to fall off as you age. Reducing overhead is a crucial concept.
The best (or worst) gets saved for last and that is the bane of high interest debt that siphons off one’s earnings into someone else’s pocket for months and years on end. It is this most egregious marriage between easy credit and impulse purchases that cause more damage than anything else. Nor is it an easy trap to escape from.
It all boils down to a couple of simple things. You need to stop worrying about where your money is coming in from and start thinking about where it is going out to.
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