Simple Truths About Money
5. Contrary to popular opinion, you were not born to shop.
It's difficult to live in the United States and avoid the consumer society that has developed over the last 40-50 years.
Our economic and social system is based on capitalism, which is simply defined as the creation of goods and services for profit in a market. The consumer (you) plays a very important part in this equation as the buyer of these goods and services. Consumer spending is so important to our economy that several indexes have been designed to measure it. The most widely used is the Conference Board Consumer Confidence Index and is used to determine the direction of the economy.
The other important player in the equation is the advertising industry. It exists to get you to buy things that you may or may not want or need. Watch a few episodes of Mad Men to learn the tricks of the trade. It's almost impossible to escape from the influence of advertising unless you live like a hermit or have great will-power. It doesn't help that when we watch our friends buy things, we want them too.
Born to Shop?
No wonder we sometimes feel as though we were born to shop!
But you can take back your power and decide whether you want to spend your money or not. It's up to you and you alone. It's time to denounce popular opinion, admit you weren't born to shop, stop spending more than you earn, and live within your means!
There are things you can to to take control of your spending.
Undertand Your Cash Flow and Balance Your Budget
Go the the Getting Started page on this website and local the "client package". Within it you will find a cash flow worksheet. Spend some time on this tracking your actual spending and then create a new budget so that you aren't spending more than you earn. Pay special attention to discretionary items such as clothing, dining-out and travel. Many people lose track of what they are spending in these areas.
Some Tips for Staying on Course Now That You Have A Budget
- Use mint.com. This is software that tracks all your expenses, income and savings in one place. You can enter your budget and it will send you an email when you overspend on an item.
-Try the envelope system. Place your budgeted amount for discretionary items such as clothing or food-out in an envelope in cash. When the cash is gone, no more spending on those items until the next month.
-Leave your credit cards at home. Become more conscious of what you spend. Try paying cash wherever possible.
-If you are tempted to buy something that you might not need, leave the store, walk around the block and think about it. Nine times out of ten, you won't go back.
Don't Forget to Reward Yourself
Each month that you stay within budget, reward yourself in some small but significant way. Indulge in a nice lunch out, get a pedicure, or order an nice glass of wine with a meal. You deserve it!
Resources:
Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence: Revised and Updated for the 21st Century by Vicki Robin, Joe Dominguez, and Monique Tilford
Money Magic: Unleashing Your True Potential for Prosperity and Fulfillment by Deborah L. Price
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