It’s a feeling that most of us are familiar with. You take one look at your account and you’re left wondering, “alaaar, where did all that money go?” Maybe for you this happens once in a while or maybe it happens on a monthly basis. Either way, it’s time we examine some of the money habits that are bound to leave you broke.
1. Spending more money than you make.
Truth is, it doesn’t sound even remotely logical to make, say, 150k a month but live off 200k, but regardless of what your earning looks like, it’s very easy to find yourself living above your means month in, month out. How does this even happen? Two words: Lifestyle Inflation. That’s right. Inflation isn’t just a thing that happens to the big economy, it happens in your own small world as well. Lifestyle inflation is like taxing yourself for earning more. Walk with me here a little bit.
There was a time when you weren’t making as much money as you are now and you lived in a more affordable house, maybe drove a more affordable car or were perfectly comfortable with using public transportation, maybe you preferred to carry lunch from home to save that extra coin, or preferred cooking at home as opposed to eating out at fancy restaurants, again to save some of that hard earned cash. But the more money you started to make the more you found your expenses increasing. Suddenly the things that were good enough for you back then, no longer are. This isn’t entirely a bad thing. There’s no shame in admitting this to yourself. This only becomes a problem when you fail to control your lifestyle inflation and now it has you living from paycheck to paycheck, or worse, in debt.
Solution: It might help to do a lifestyle audit. A little financial literacy can take you real far in this regard. Get better at managing your money by keeping an expense tracker to help you understand where your money is going. Ask yourself the hard questions, questions like, “Damn, do I really need to buy this?” or “Can I even afford this anymore?” Then weed out the unnecessary things that are draining your wallet needlessly.
2. Spending money you don’t have.
We all at some point in the month (or week, depending on how your earning cycle looks like) do a mental (or physical) calculation of the income we’re receiving and form a plan, however vague, of how we’re going to spend this money. We call it cash in hand. Usually, when your expenses are within your income, that mental calculation can leave you feeling really good about yourself. Like you have your adulting stuff together. But what happens if that math simply isn’t ‘mathing’? Have you ever found yourself counting your mobile loan limit or fuliza overdraft as your cash in hand ? Has the thought, “Oh, I’ll just fuliza to pay for XYZ” ever crossed your mind?
That’s what we mean by spending money you don’t have. Because in real sense, any loan you take, any overdraft you take is money that does not, in fact, belong to you. Ignore the congratulatory messages that come with unlocking a new loan limit., That cash is not a gift, it’s a debt that has to be repaid. And as we both know, doing mental calculations for debt repayment is not the most enjoyable thing to do in the world.
Solution: If you want your math to start ‘mathing’, you’re going to have to be a tad bit more serious about your budgeting. I’m talking about, really sitting down with a pen and paper, or excel sheet, or one of KUZAH’s budgeting templates, and really intentionally mapping out where it is you want your money to go, what expenses you can compromise on and how you plan on closing the gap between how much you spend and what you earn. It’s the only way, friend.
3. Spending money to make yourself feel good.
It is truly a blessing and a great privilege to have enough money to spend spontaneously in retail therapy. And in truth, a little retail therapy won’t kill you. The problem with it though is that anything that makes us feel really good can be highly addictive. And this little thing you do once a month can turn into a habit that can easily tear deep deep holes into your not so deep pocket. You see, retail therapy doesn’t always come at the end of a really bad day. It won’t always be a situation where you buy a new shoe to make yourself feel better because your boss or significant other shouted at you. Research shows that your brain releases a whole bunch of feel good hormones when you find an incredibly good deal online, make the purchase, anticipate its arrival and finally get to unwrap the new item once it’s delivered, so conveniently, to your doorstep. Which is to say, if you're a fan of online shopping, retail therapy can very quickly become the thing you turn to just because you’re bored at home. home and you’re bored.
Okay, let’s be honest. How often do you go online just to ‘window shop’? And how often do these turn to shopping sprees? Or how often do you find yourself making spontaneous purchases and then justifying in your head by telling yourself “If your money can’t solve your problems, eat it.” But how often does eating your money solve your problems? Doesn’t it make so much more sense to allow it to accumulate into an amount that might help to solve another problem in the future? Like buying a home or paying school fees, or taking care of yourself in retirement?
Solution: If you practice a lot of online retail therapy, and you want to kick this habit to the curb, a really practical trick that can help control your emotional spending is to delist your debit/credit card from the online payment services and keep it far far away. That way, you’ll have a second to really deliberate on whether a purchase is necessary when you get the prompt to enter your card details and you have to get up from your couch and go looking for it. Another thing that might help you is to delay any non-essential buy by 48 hours. In that time, you might find yourself feeling a little bit different. Maybe that item won’t seem that attractive to you after 2 days.
But if you practice a lot of offline retail therapy, then it might help to go back to your budget. You want your math to keep ‘mathing’ all month long, right? Then don’t carry more cash than you need to and don’t put all your disposable income in one place i.e your mobile payment platform of choice, because it makes payment for that spontaneous shopping very easy. And lastly, don't stop to stare at that lovely expensive watch/blouse/car for a second longer than you need to; Have you had a bad day at work? Talk to someone about it, or take it out at the gym, you’ll feel better afterwards. Trust me.
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