I received an email earlier this week from a reader who is really struggling to break old habits and stop the financial bleeding in her life.
What’s the number one piece of advice you would give someone who just can’t seem to get it right when it comes to money?
It scares me a little to think that someone would approach me for advice – in my head, I’m still the same spendaholic I always was. But then I think about where I am now versus where I was, and I realize that financial kickassness (is that a word?) is relative. To me, I still suck at many things where money is concerned, but to someone in in the mode I was in before, I might be doing really well.
Let’s Talk Some Smack
I don’t know anything about the person who emailed me – just that she is having a hard time and looking for advice. She didn’t send me her bank statements or security footage of what goes on in her house, so I won’t make assumptions about her life based on the short email she sent.
Instead, I’ll just discuss my ex-husband. *rubs hands together gleefully*
Honestly, I try not to badmouth him too much – we’ve been divorced for three years and it’s none of my business what he does (except where our son is concerned). But he exemplifies what happens when you don’t make good financial decisions, so in this case he’s an easy target.
Please note: When S and I were married, we were nearly identical in terms of our spending (terrible) and saving (nonexistent) habits. The difference? I grew out of it and he didn’t. This man is nearly 34 years old and is constantly broke, whining about money, overdrafting his bank account, paying late fees… All the things I used to do before I got over myself.
When I get paid, these are the kinds of thoughts that go through my head:
- What bills are coming up?
- Are there any events (oil changes, birthdays, weddings, etc.) this month that I should be saving for?
- How is the grocery situation in my house? Do we need stuff?
- Does the business need anything urgent?
When S gets paid, these are the things he thinks about:
- ZOMG MONEY! I’m going to go out to eat and buy some clothes before it’s all gone!
- Hey, the game I play on Facebook is having a 2 for 1 sale on random points/coins/whatever! I better jump on that!
- McRib is back!!!!!!!
- Wait, where’s all my money? I just got paid; I should NOT be out of money!
- Damn the bank for sending my scheduled bill payments! Now my account is in the red AND IT’S ALL THEIR FAULT!
This is a true story – I saw my ex mother-in-law the week of Christmas and she immediately started complaining about giving S money to clear up a bounced check. “I told him he better quit that online banking crap,” she told me. Um, what does online banking have to do with anything? I know what she meant; his bills are scheduled to be paid automatically on their due dates (thanks to me setting them up that way for him), so I’m sure something came out and he didn’t have money to cover the check he wrote. But why hate online banking for doing what it’s supposed to do? He’s the one who didn’t leave enough money in his account to pay the bills!
Spend Too Much? You Don’t Have Control
Most people who are drowning in debt and overspending have the same philosophy when it comes to money. (And I feel qualified to say this because I’ve been there.) They feel like they are just a miniscule, helpless blob floating in a sea of paydays, bill payments, and unexpected emergencies – there’s nothing they can do about it except hang on for the ride.
That’s how my ex-husband looks at things, and that’s how I looked at things when we were married. In our minds, all we could do was go to work, earn our paychecks, and hope that the money lasted until we got paid again.
It never occurred to us that we could actually decide what happened with our money, or that we had the power to change our perpetual cycle of broke, weekend millionaire, broke, weekend millionaire. That’s just the way things were and we were too entrenched in the cycle to change anything.
Except there were plenty of things we could have done. I learned about them when I got divorced and decided I was tired of never having any money. I’ve even tried to explain to S (multiple times) how he could end up in the same place I am now – not perfect, but much better than I was. But he’s not willing to give up his wimpy “I can’t help it” mindset; therefore there’s nothing anyone can do to help him. Except bail him out, as his parents have been doing for years.
Want Control of Your Money? Here’s How to Get It
It is surprisingly simple to take control of your finances. It’s not easy to change your mindset when your entire way of life revolves around being broke, but it can be done if you really commit to the steps below. (Kind of a fake it til you make it kind of thing.)
1. Figure out where your money goes. If I had a dollar for every time I’ve said this in the past 2 years, I could probably pay off the rest of my car loan. You have to know what you buy and what bills you have, even if you don’t really want to know. That was my problem – I would get completely overwhelmed when I looked at the big picture. Why? Because I spent more than I made, and when I saw the outflow of money against my income, my brain would shut down.
Even worse, I was guilty of creating an idealized picture of my spending. “Well, I’ve spent $300 on clothes each month for the last year, but that’s not typical. Now I have all the clothes I need so I can leave that out.” No, you can’t. You can’t sugarcoat what you spend – you need to look at your bank statements and be completely honest with yourself.
2. Decide what you can really afford. When I created my single mom budget a few years ago, I had to prioritize my spending. Food was first (because there’s no way I’m missing a meal), followed by shelter (rent/mortgage and utilities), necessary clothing, and transportation. Then TV and internet (again, being honest with myself), then debt repayment.
You know what I found out? I really couldn’t afford much by the time I paid all that stuff. So why the hell was I spending hundreds of dollars a month on other crap? Because I had never ever taken the time to compare the necessities against what I earned.
3. Stop buying extra stuff. At least for awhile. OMG this was the hardest, shittiest thing I ever had to do. No going shopping, no grabbing random stuff in Target “because it’ll look great with my house,” no ordering stuff from Amazon. But I had to. I had to experience a few months of paying only the important stuff to know what I had left to spend. As I did it, I learned that I actually had more money than I thought, but I never knew because I was spending it “only $20″ at a time.
When I first decided to go on a six-month spending fast, I had plans to reward myself at the end with a day of shopping and a meal out with a friend. The funny thing was, by the time I got to the end of the six months, I really didn’t want that anymore. It was cooler to me to have money in the bank for a change. Control.
The Bottom Line
Some of you are reading this going, “Well, she doesn’t live my life. She doesn’t know my circumstances.” Nope, I sure don’t. All I know is that the only way you can change your finances is to control your money instead of letting it control you. People who have money only have it because they’re in control; the rest is just details.
I have never met an overspender who actually followed the three steps above without seeing improvements. I’ve only met people who were so addicted to the chaos of being broke that they never tried in the first place. It’s up to you to decide which path you’ll follow.