Do you sometimes feel like saving money is impossible? That the bills just keep piling up, and you keep suffocating underneath them? When’s the last time you evaluated your spending?
There are many people out there who complain about being broke, while doing absolutely nothing to save money or improve their financial situation. They go through life spending on what they think they should spend on, without ever stopping to think about the value they’re getting out of it.
With the prevalence of technology, there are certain things considered “necessary” these days that weren’t generations ago. Can you imagine living without Internet, TV, or cable? Probably not, but chances are, someone you know went without all of those at one point.
This post isn’t targeted toward those who actively try to save money and optimize their budgets. This post is for those who I sadly shake my head at every time they go out for lunch, every time they buy a new car, every time they prioritize spending over saving…and yet still say they’re broke.
What’s Making You Broke?
I’m sure everyone knows this type of person: they live paycheck-to-paycheck, worrying about how they’re going to make ends meet or how they’re going to save money, and yet they have spendy habits. It makes you wonder if they’re truly struggling, or if they’re struggling because they’re making themselves the enemy.
Now, I know we don’t have the full story behind some people’s finances, but if you’re that hard-pressed for money, I don’t think it’s wise to go out every day and buy lunch.
Then there are some people in my family who absolutely refuse to give up on certain expenses (like cable, fast food, or expensive data plans for phones they don’t know how to use), even temporarily. However, they’re in debt, and any money they’re spending is taking them further away from freedom.
A lot of the time, there is something we can all do to improve our financial situations, but the vast majority choose not to. They choose the easy road. The one that everyone else follows, that leads to mindless spending and consumer debt.
Figure Out Your Priorities
If you really want to save money, it all comes down to priorities! I think everyone can do with putting things into perspective once in a while, so let’s go ahead and do that.
What’s worse: spending $1,500 a year on cable, or ditching cable, and putting that $1,500 toward debt, or retirement (if you’re severely behind)? What matters more to you in the long run? (It doesn’t have to be cable, either, of course. If that service is worth it to you, then great!) It gets worse: over the course of 10 years, a $130/month service will cost you $18,000 – probably more, if you take inflation into account.
Need more perspective? Think about how much any service you currently subscribe to is going to cost you in retirement. Assuming your retirement lasts 30 years, $1,500 * 30 = $45,000. That’s close to one year’s worth of salary for some people!
You could easily make your retirement a bit more affordable if you opted out of paying for certain things.
You need to ask yourself if what you’re paying for various things is truly worth the price it’s going to cost you – both now, and in the future.
I was personally spending $90 a month on my cellphone bill with Verizon. It made me sick to think I was spending over $1,000 a year on that service, when I’m not someone who’s overly attached to my phone.
I switched to Republic Wireless, and now I pay a grand total of $360 a year to have just about the same service (cell-wise; their customer service is far superior). That’s a lot of money being saved, and it was a painless transition – you can get your own plan starting as low as $15 per month.
A switch like that is only the beginning. There are many ways to save money every month that can result in hundreds of dollars in your pocket and not going to someone or something else each month.
To Save Money, Change Your Mindset
What I’m getting at here is that if you really want to get serious about saving money, you need to change your mindset. Start questioning your expenses, and ask yourself if the things you’re spending money on are providing you with enough value.
There’s no reason to go along with the status quo and assume everything from cable, to a smartphone, to a tablet, to getting your hair cut every other month, to buying a luxury vehicle, or to dining out every day, is an absolute necessity.
*Related: Looking for a cheap cable alternative that carries local channels? Read our review of Hulu Live to see why they’re a great solution to cut the cord.*
So many people get caught up in the act of keeping up with the Joneses because it’s largely a mob mentality. They don’t stop to consider if purchases are right for them, they just assume it’s a good purchase because it’s what’s popular.
You also might need to change your mindset when it comes to defining what success looks like. John spoke about this last week, and touched on a few great points – namely, that many of us think home ownership and going to college is a recipe for “traditional” success.
There are a lot of people breaking that mold these days. I don’t have any desire to be a homeowner right now, and I’m not sure if it will ever be the right choice for me.
The point is, I’m thinking for myself. While the typical “path to adulthood” might mean buying a home, settling down, starting a family, etc., we don’t have to follow it.
We must do what’s right for ourselves and our finances, and many times, that means going against the grain.
Breaking Free from Your Old Mindset
Convinced you need a change in mindset when it comes to saving money? Good, welcome to the “dark” side – we most definitely have cookies.
The best thing you can do to break free from your old spending habits is to adopt the new habit of questioning your purchases.
You need to figure out what needs to go, and what you can keep. Think of it as decluttering your financial beliefs.
Do you have cable simply because you signed up for it when you moved in? Do you have a crazy expensive phone bill you could do without? Do you have a bit of a shopping obsession?
Go through your bank and credit card statements line-by-line and be honest with yourself in your assessments. Ask yourself a few of these questions:
- Do any purchases surprise me? Do I remember them?
- Did the items I bought bring me happiness? Or was I stressed figuring out how to afford them?
- Do I have enough of one thing already (like shoes)? Do I really need more?
- Why did I buy something? Was it for myself, or was I trying to fit in or impress someone?
- Did I think twice before buying something, or was it an impulse buy?
Going through these questions will help you realize your spending weaknesses, and you’ll be able to draw up a game plan for improving your spending habits, and changing your mindset, when it comes to money.
Saving doesn’t have to be hard, it just requires a little thought and doing what’s best for yourself.
Additional resource: If you’re looking for a simple way to stay on top of all your finances and find money saving opportunities, then check out my favorite tool – Personal Capital. Completely free, it allows you to track your spending, monitor your bank and investment accounts and watch your net worth grow plus many other tools.
Have you ever had to change your financial mindset? Was saving money ever a struggle for you? What helped you start saving?