Live to Impress and You will always be Broke!

To have money – You cannot live to Impress

Most of us are blinded so much by the notion of trying to impress others that we forget to really look into our own financial buckets before we spend. We are so busy worried about what she thinks, what he will say when we wear the same dress to the party that we wore last year to the other function, what they will think when we don’t order the shoe that they are all placing an order for, what she will say when we………. The excuses to be irresponsible never end with people I find.

Here are my questions

-       Does she contribute to your financial lifestyle?

-       Will you grow grey hairs on your face if they talk, laugh at you or look down upon you?

-       Will the sun stop shining because you didn’t attend the party you couldn’t afford a dress for?

-       Do you stop breathing because they stopped talking to you; or worse still

-       Say you yield to their pressures and spend Willy-nilly – will they be there to clean up your mess when the shylocks and banks start knocking loudly at your doorstep? Will she, he?

If your answer is no, you have no business worrying or even spending one second considering them in your decision thought process. They do not matter in the larger scheme of your life, therefore do not make them any more important than they actually are

The Mistakes we Make

Yes, we are all human and therefore fallible to being in a position where we will continue to make financial mistakes from time to time - that's just part of life. However, knowing about common mistakes beforehand can reduce your odds of making them. Understanding what it is that is likely to lead you to your downfall can save your skin.

Let us therefore briefly take a look at some of these common spending mistakes:

§  Buying On Impulse

If you are like me, and you will buy a can of coke, a snack and/or a bar of chocolate in the checkout lane every time you go to the grocery stores or filling station and you go to the grocery store twice a week, that seemingly inconsequential purchase is costing you E200 a month, or almost E2400 a year.

And if I am like you, I will be buying that occasional beer every evening, that bottle of wine to enjoy as I distress, and if this becomes a habit – I end up distressing every evening and spending e50 a day which will by week end be over E300 for I will finish the bottle (hopefully not in one day but over a week). That becomes a bill of E1,000 a month on alcohol and by year end, you have spent over E20,000 if you include the weekend binges that happen now and then. Write it down, you will be shocked. 

Add a few other impulse buys at a few other stores over the course of a month and no matter how inexpensive they are individually, they will add up to a number that will shock you.

There's nothing wrong with buying snacks or that bottle of wine now and then, but if you notice by reviewing your budget that you are buying it at a rate of 52 packs a year, you can plan to buy these in bulk at wholesale stores if you must for a third of the price and save money. Or better yet, you can reduce your intake on these that society has classified unhealthy (I who was I to disagree?).

Writing down even those minor E10 purchases every time can help you spend more wisely in the long run.

§  Becoming the Victim of the “I want to look rich” syndrome

We all have had this experience. You go out to do something or buy something expecting it to cost a certain amount of money - an amount you've budgeted for - but when you get home you realize that you ended up spending much more. How does this happen?

Perhaps you decide to go out with some friends on a Saturday night and you think you're just going to a bar, but once you get there the group decides to go out to eat as well, or to surprise another friend who is located some 15km away from where you were originally planning on being, and behold, you do not want to disappoint or show that you may not have catered for the additional fuel. After all, you are already along for the ride, so it's easier to give in to the pressure to join in on the food and trip rather than be the odd one out. In that same scenario, after you've had a couple drinks, money may not seem like such a big deal and you may buy everyone a round against your normally better judgment.

These things happen, and you won't always be emotionally strong enough to prevent them.

However, if you know that you have a tendency to buy more than just one thing when you go to the store, or if you know that your friends have a tendency to change their plans at the last minute, either avoid these activities or create a bigger budget for them ahead of time.

§  Being so Frugal it Makes You Miserable

Budgeting is like dieting: If you try to deprive yourself too much, you will just binge later and throw all your hard work out the window. A spending binge can set you back far more than treating yourself occasionally, so go for the occasional minor splurge. Buy that bottle of wine or those new flowers for your yard. Let yourself take a vacation. Just keep your treats within your spending limits and you'll be fine. This may mean you're saving E1,000 a month instead of E1,500, but it's better than saving E1,500 a month for six months, making yourself miserable in the process, then going out and blowing E5,000 in the seventh month.

 

§  Ignoring the Time Value of Money

It is true that sometimes the cheapest way is not the best way. If milk, bread and eggs are cheaper at one grocery store like Shorprite as most argue, chicken, butter and cereal are cheaper at another like Superspa, I am not convinced that means that you should go to both stores every week to get the best possible deal on each and every item. The time it takes for your to move around, the fuel utilized if you need drive to each does not justify the few cents that you will save from each item.

Besides, unless you have incredible self-control, you will probably be tempted to buy something at the second store that wasn't on your list, thus defeating your whole purpose.

Moving Forward

You may have made the mistakes in the past we all agree, as I have for many times and been caught in a cycle of robbing peter to pay rob, yes – you made mistakes. The key to successful planning however, like life itself, is to learn from them and move forward.

Like riding a bicycle, budgeting and self-control is a leaned habit. Once you get the basics and stick to them you will soon be flying. So – lets go……

Next we start looking at Investment Options!!