Control My Spending
When you spend a dollar is that you are actually spending more than a dollar because you are spending your take home pay. For most folks this means that you have already paid your taxes at 3 levels of government, and your pension plans and unemployment insurance. Depending on where you live and what tax bracket you are in, this can account for up to 50% of your earned income. Benjamin Franklin said, “A penny saved is a penny earned.” Now it is more like a penny saved is 2 cents earned.
You have to find a way to capitalize on this fact. Have some respect for yourself. You work hard to earn your living. You have paid your dues to the society in which you are living. Now you are finally down to the money that takes care of you and your needs. Don’t waste it. Make sure that you get the most pleasure out of it that you can. Make sure that you spend it on things that give you pleasure. Make sure you get as much pleasure as you can per dollar spent. Get full value!!!!
Learn about yourself and ask yourself, “What do I really need?” Do you need that 6-carat diamond or do you need true love? After a hard week, do you need to over stimulate yourself with action or is some quiet time needed? Do you have to spend money and race around? Some of the most relaxing things are free or almost free. When you manage your money, you manage your emotions and vice versa. The importance of managing your emotions is that when you use money to make your self feel better or do things you enjoy, you are enjoying the cream of your hard earned money. Get full value!!!!
Control Your Spending
To control spending you first must recognize some of the ways that your 2-cent money is taken from you and you are given little of value in return. On top of paying government necessities, you have to pay for the necessities of life. You do not get through life without having to pay some medical bills. You have to buy the necessities of food, shelter and clothing. As your cash is flowing through the system, the bank takes a little piece of every transaction. The comedian “Gallager” who was famous for his vegamatic sledgehammer did a video called “Money”. He had one line in that routine that is particularly relevant in the context of bureaucracies and banks and your money. It was: “Wherever you leak, they hang a bucket.” They chip away at you for pennies, nickels, dimes and quarters every time you make a transaction. If the bank and the government and don’t forget the cell phone companies, respect the power of pennies, nickels, dimes and quarters, it is obvious that you should be humble enough to respect that dynamic as well.
So as you are enjoying spending your money watch out for those trying to hang a bucket on your wallet. You will recognize them most because they have fees and taxes and hidden charges and paperwork attached. They are there especially when it is an emotionally charged event. They are attached to the most emotional events in life; marriage, house buying, divorce and burial. In all of these cases there is a queue lined up at your wallet for a piece of the action. You will see this queue when you buy any luxury good that would have an emotional charge such as a vintage car or your “dream home”.
A lot of egos are all about flashing money. We have all watched the “big shot” and the “high roller” in action. It is exhilarating for them if they have the money. It is great for the economy that the money gets back out there circulating and creating jobs. However, if you do not have the money to do this, and you do it, you are committing financial suicide. Even some of these high rollers can undo their own wealth by becoming so wrapped in the ego of “high roller” that they lose track of the solid business practices and money management that got them to that status. Entertainers through history and in the present are noted for this. Inheritances are squandered this way. Families are impoverished this way.
Money and emotion are often dangerously interlinked. How many young men lose their minds in the presence of a woman? “The lyric in the Robert Palmer song goes “She’s so fine, there’s no way of knowin’ where the money went”. I remember watching over a 17-year-old group of my daughters teamates doing some fund raising. The young guys didn’t even get close enough to talk to these beautiful young ladies much less ask them what the worthy cause was before they had their hands on their wallet digging out an impressive contribution.
When a penny spent is 2 pennies earned, you must understand just how much you love that pet. One movie that is a Christmas rerun every year is National Lampoon’s Christmas Vacation. Who can forget the character of Cousin Eddy and his dog “Snot”? I don’t like to take the fun out of watching the story or owning a pet, but the scene where he loads up 200 pounds of dog food that he can’t pay for is a stereotype that is far too real not to address. Why are they struggling financially? It is a question of mixed up priorities. How can one in that situation put that much money and ego into a pet? I can understand that one may enjoy the comfort of a pet, but if you need pet comfort can it not be gotten at least from a more affordable animal? Also, like the high rollers, I can understand if you choose to spend your money that way and it gives you pleasure if you can afford it. If that is the case, are you conscientious enough to fulfill the animal’s emotional needs as well or is this a one way street?
Vanity is another very expensive emotion. Status symbols are all bought with 2-penny money. Make up is bought with take home pay. Hair stylists, spas, surgery, and jewelry all are paid for with take home dollars. For some the argument is that after using these products they transform into such a goddess that they motivate men to move mountains. For others, it is an indulgence that renews them after working so hard to be successful. Style and keeping up with it is another indulgence that strokes this emotion. I am not saying abandon these activities and purchases. They are fun. What I am saying is that you worked hard to get them, you are using your take home pay to buy them so make sure that these things are what you really, really want more than anything else that you want to spend your 2-cent pennies on. The manufacturers and retailers of these items and the advertising and promotions they use go after your emotional buttons. They make you feel like you are some kind of irresistible sex symbol if you use their product or an out cast if you don’t. You should be more confident than to be vulnerable to this kind of not so subtle suggestion.
Food is a huge industry. The marketers and advertisers are trying to get their share of your money for their company wherever they can and if they can make you leak a little extra cash, they are waiting with a bucket to catch it. The food conglomerates are trying to produce meals that are supposed to be like home cooked meals but all you do is heat them up. When you are really in a rush you can hit one of the fast food chains. Whether you are in a hurry or have some time to relax, there is a restaurant that will offer you what you want for a price. When you are spending your 200% dollars, you have to ask, is their product worth the price and the lifestyle when there is another option?
By lifestyle, I mean that you work a full day, and then you race past the grocery store, or hit the fast food restaurant or go out to a restaurant for your repast. You rush through dinner and then rush to your evenings’ commitments.
The option is to make your take home dollars work a little harder on your food budget. By taking the time to shop prudently, learn how to cook properly and then take the time to cook properly, you can cut at least 50% off of a prepared meal food budget. To figure out how hard you are working for someone else to make your dinner let’s do this calculation. Take the full dollar amount of your monthly food budget. (50% is for preparation times 2 because it is out of take home pay) Then divide that amount by your hourly rate of pay. That will give you the number of hours that you work each month at your job to pay for food preparation. When you get the number it may surprise you and then you have 3 choices. First choice is to maintain the status quo as a cost of working. The second choice if possible is to reduce the number of hours that you are working and use that time to reduce food costs. In the end you stay about the same in regards to the amount of money left for other things in your budget but in a double income house, one person can be home minding house business and kids at the same time as they are reducing the food budget. The third option is to keep working but get organized so that you budget your time to shop prudently and cook your own meals. That leaves a substantial amount of free money in your budget for indulgences or saving and investing or all of these things.
Do not underestimate the power of pennies, nickels, dimes, quarters and dollars saved. I have a little game that I have always played since my kids were born. I take whatever change I have in my pockets at the end of the day and put it in piggy banks for the kids. Once every few months, I roll it up and put it into a savings account in the kids’ names. Do you know that I have always had money for special projects for them? Those pennies, nickels, dimes and quarters have added up to thousands of dollars over the years and our kids have never done without even through the leanest times. Now it pays for my wine making hobby.
Take this concept and adapt it to your whole spending budget. If you take time to analyze a new car purchase, you can identify a multitude of ways that they are trying to hang a bucket on your wallet. Any purchase like a cell phone, that wants you to pay by monthly draws from your credit card or bank account should be scrutinized thoroughly as a bucket. If you analyze all of your purchases you can spend much less money and still accomplish the emotional goals you have aimed for. This is the “trenches” of money management.
This is where you really have to THINK YOUR MONEY .