3 Ways You’ll Spend More Money in 2016
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If you’re trying to save money like a boss in 2016, there are a few things in this consumer culture we call life that you should probably avoid. These three things are not just examples of poor financial habits; they are examples of poor investments that could cost you for years and years to come. They are incredibly alluring temptations that can derail even the best laid spending, investing and budgeting plans. Knowing about them ahead of time however, can help you recognize and avoid giving into them.
So, if you really want to save money, live more frugally, or pay off significant debt in this bright and shiny new year, here are three things you should probably avoid.
Keeping Up With the Joneses
Do I hear an echo? We wrote about the vanity of keeping up with the Joneses here recently, making a case against conspicuous consumption because it makes sense for more people to be aware of their spending habits; it’s important to know whether or not you spend because you are trying to keep up with trends and fads or if you are striving to let your spending be thoughtful and motivated by a genuine desire to achieve personal financial goals.
People who try to keep up with societal normals, celebrities or their friends who appear wealthy are more likely to spend money they don’t have on things they’ll really never need. It doesn’t matter if it’s high end clothes, expensive gym memberships, or buying a nicer car, trying to keep up with your peers will only cause you to spend more in 2016.
Instead, focus on your own goals and hobbies and spend money on the things you need instead of the things you want. Trust me, I love an adorable pair of new shoes just as much as the next girl, but if I’m being honest, I don’t need them. So, in 2016, I will try to be aware of these tendencies and continuously remind myself of what’s really important.
I know from past experience that’s a tall task. It’s easy to start off the year strong and find a few months or halfway through it that you have no idea what you’ve been spending or where you stand towards reaching your financial goals for the year. There are many free tools out there, like Personal Capital, that make keeping track of your expenses and spotting the trends in your spending easy; if you need a tool to help you stay on track, set it up now while your goals and motivation is still fresh in your mind.
That ready analysis will help you resist the temptation to spend like the people around you, including your friends. Besides, keeping up with your friends is futile because they’re probably broke anyway.
Upgrading your Home
I recently had to step away from a Facebook “discussion” (don’t you love those) where several other doctor’s spouses were talking about using doctor loans to purchase a home. Doctor loans are home loans offered to physicians, dentists and others in similar professions. Doctor loans usually require 0% down with no PMI and slightly higher interest rates than a typical mortgage.
Many people I know who have six figures of student loan debt are jumping into these mortgages, tired of being renters and wanting to “invest” in a piece of property. I tried to offer some advice, saying 0% down was and always will be a terrible idea, but I got shot down pretty quickly.
The truth is that upgrading your home will always cause you to spend more money. It’s not even just about the home. It’s about the paint, furniture, accessories and all of the extras that come with having a home to call your own.
So, in 2016, if you’re craving an upgrade to your house or even your car, assess it. Can you afford it? Is it a good investment? How will it affect your financial future? Will it slow down your debt repayments? I’m not saying to never upgrade your home or lifestyle; I’m just saying to avoid it if your goal for 2016 is to spend less.
Adding To Your Family
When I say “adding to your family” I mean children of both the human and the furry variety. If you decide to buy a dog, for example, did you know the average cost to own a dog is $2,084? I know I’ve personally spent more than that on my dog mostly because she has a penchant for near death experiences (seriously, she’s like a cat and has been through at least five lives by now.)
Of course, if you want to add a baby or another child to the family, you’ve heard the statistics. It costs $245,000 to raise a child from 0-18 not including college. Personal finance blogger J. Money even tracked his expenses from his first child and found that he spent over $15,000 in the first year alone. Needless to say, babies are expensive, but they sure are adorable.
If you want to add to your family, I think it’s a wonderful and beautiful thing. Just make sure you’re aware of the costs going into it and save a substantial emergency fund to take care of all of life’s fun little surprises.
Overall, if you don’t want to spend more money in 2016, keep your eyes on the items above, especially superfluous expenses like clothes and dinners out that can really be avoided.
Why do you think so many get caught in the trap of spending more money when they don’t need to? What is one area you want to cut back in during 2016? What big financial goal do you have for 2016?