If you received a raise tomorrow, what would you do? Would you celebrate with a glass of wine? A dinner out? These are things you deserve for a job well done, but your new income shouldn’t effect your current or long term spending habits.
The problem is our minds think that we can and should spend any money that comes into our accounts. If we suddenly get a raise, we think we should be able to live better, more extravagantly, but what if you lived exactly the same as you do now?
Financial wellness is not about having so many dollars in your bank account, but about being someone who behaves in a financially healthy way by spending, saving and living better.
A loss of perspective effects us all. If you remember your first paycheck you remember that feeling of the world, or the mall, being your oyster but that feeling quickly evaporated when you started handing over chunks of your check for rent, loans, groceries and other bills. With credit cards and other ways that Americans over spend, we tend to feel like we have more money than we actually do and then are continually shocked by our statements we receive in the mail every month when the bill is due. You’re damaging your financial health by not looking at your numbers. You need to balance how much your spending with how much you’re earning. One simple approach to avoiding this is coming up with a Daily Spending Limit. With a DSL you’ll never loose focus and you’ll have a whole new perspective when you realize that new shirt or shoes are seven days worth of spending. To figure out your daily spending minus your required living expenses from your take home pay and then divide the number by 30.
While you’re not likely to go broke from frequent trips to Starbucks, if you can’t afford the habit you could still be damaging your financial health. This is especially true when you talk about habits such as a bottle of wine a day or a pack or two of cigarettes. These costs will add up significantly. Figure out how much you’re spending on your daily habits over the course of the month. Sometimes seeing the total cost is enough to curb your addiction. You could also pre-budget these habits by subtracting them as a “required living expense” when you’re doing the math for your DSL.
Being a shopaholic may sound like something cute from a reality show, but such behaviors can destroy relationship, hinder your ability to be financially healthy. Ask yourself the following questions:
- How much of your time is spent buying things or thinking about buying things?
- How often do you feel guilt, depression or shame because of your discretionary purchases?
- How often do your discretionary purchases impair your ability to pay for basic necessities?
If your answer is ‘often’ or ‘always’ to even one of these it’s probably time to speak to a licensed therapist about how you can find a happier, more sustainable lifestyle.
Take a moment to examine your own behaviors. Figure out which of these are effecting your financial health and then take the time to map out ways to help you remedy the situation.
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