You might earn a gold medal when it comes to being responsible at work, school and at home. But when he comes to financial responsibility, you drop the ball big time.
The manner in which you manage your money today is significant to your financial future. Unless you’re independently wealthy and can buy whatever you want whenever you want, you can benefit from having an attainable budget or spending plan. This can ensure sufficient income to take care of expenses, as well as prepare your money for the future.
Even if you’re a responsible person in just about every area of life, making sensible and smart decisions with your money can prove challenging. You might go as far as justifying poor choices to shift blame and avoid accountability. But ignoring your weaknesses holds you back and stops you from realizing your full financial potential. You can’t progress until you let go of common excuses.
1. Retirement Is Far Off Into the Future
Some young adults are preoccupied with paying down student loans and buying homes, and they don’t think about retirement planning. But your 20s and 30s is as good a time as ever to begin making preparations for your retirement years.
We tend to take on more and more financial burdens as we become older, so it becomes harder to save later in life. But if you start early and open a 401(k) or an individual retirement account when you have fewer financial obligations, you can establish a concrete savings routine, which can become second nature and follow you throughout life.
2. We Only Live Once
Youth flies by in the blink of an eye. If you’re young, single, and childless, you may feel this is your moment to live life to the fullest. And if you have a family, you might work toward giving your children as many experiences as you can. But if you don’t practice self-restraint, or if you embrace the mentality that we only live once, this idea could turn into an excuse to go wild with your money.
Spending money just because you can builds memories and you’ll have fun, but this lifestyle won’t help you achieve financial goals, such as growing a saving account, paying off debt or buying a house.
3. I Don’t Earn Enough to Save
Never put off saving because you feel you don’t earn enough. There’s no rule that says you have to belong to a specific tax bracket to save money. You might not save as much as those who earn more than you. However, a small cushion is better than no cushion.
If you’re not in a position to save 10 percent of your income, start with 2 percent or 3 percent and progressively add to your contributions. Saving as little as $50 a month can build a $600 emergency fund in a year. It may not seem like much, but with a few sacrifices (eating out less or eliminating an expense every few months), you can free up cash to pad your bank account.
4. I Deserve It
“I deserve it” is one of the biggest excuses people use for never saving and getting into debt. You no doubt give your employer 110%, and you might go beyond the call of duty to assist friends and family in their times of need. With everything you sacrifice for everyone, you may argue that you deserve nice things. This mentality, however, can get you into hot water, particularly if you “can’t” deny yourself pleasure and material things. Thinking you deserve everything can be a roadblock to improving your finances. You could end up with less money and more debt.
5. Everyone Has Debt
Just because you know people who owe thousands in credit card debt doesn’t mean you should shrug off your personal debt or go crazy with credit cards. People with debt may appear to be living it up and enjoying life to the max, but it could be a facade. They’re probably dealing with expensive minimum payments and the consequences of overindulgence. Some people are quick to brag about the stuff they own, but rarely speak about how they’re up to their eyeballs in debt.
Just remember that credit card debt can haunt you for decades and rob you of any opportunity to build a savings account.
Ignoring a bad financial state might help you sleep better at night, and excuses make it easier to avoid accountability. But don’t kid yourself. Excuses also keep your poor and broke, and when you don’t take responsibility for your actions, you become your worst financial enemy.
What is the biggest financial lie you’ve ever told yourself?