Simple Mindset or Simple Minded?
We accept some things in life when we should be more careful. That is simple-minded.
Having a better mindset for money will give you the ability to be more thoughtful in your decision-making about money and all your activities that require money.
Accepting debt as a part of life is simple minded.
Realizing the value of savings and the difference it can make in your future can give you an inside track for future success!
Monkey See, Monkey Do
We often see toddlers mimic their parents or a favorite character in a cartoon. The hope is that they grow up and find a good model for making good decisions. Good parenting will help, unless they refuse to listen. However, the most opportune time is after doing something wrong or making a mistake in judgement, where a very patient person comes along to restore their confidence and gives them tools of habit or thought that will help them make better decisions in the future.
The same can be said of us as we enter the workforce and start drawing pay for our work. Our parents may have been a good model to follow in how they handled their paychecks, or not. Although, most parents do not share much about that part of their life. How well you ate may have given you some clue as to how things were going for them.
However, as you experience spending ahead of your bank deposits, you will start to create a debt obligation. Hopefully, you will be around others who were frustrated enough with that position to earnestly fight their way out of debt. Then, you may be encouraged to do the same.
Saving Is a Mindset
Saving is rarely promoted. However, you will see plenty of ads related to credit cards or other lenders promoting how fun life can be with available credit.
What the lenders are not telling you is the interest rate that will be applied to your loan. Read the fine print. Most lenders will charge 20% interest or more. On the $10,000 credit limit you decided to use, they will require a payment of $167 per month, just to pay the interest alone!
While saving may not make that kind of interest in the short term, it could be accumulated to allow you to make use of investing opportunities that will bring returns far exceeding your expectations, eventually.
Saving becomes a mindset when you monitor your spending to assure you are being able to add to your savings account every month!
Saving for Living
Saving is easier to talk about than to do. Why is that? To most, the phrase “life happens” comes to mind. Our shoes wear out. Kids outgrow their clothes. And the car will need repairs. These are some of the events that make budgeting a little difficult. For some, who live on the edge by spending what they make, these events create a good deal of stress.
The credit card company will come to your rescue to relieve your stress, this month. Then, the payment comes due, and you have new stress, especially since you found other uses for the credit card! Recognize the trend?
So how do you overcome this temptation? The answer is easy but uncomfortable for most of us. Here are five steps to take to be prepared for those “happenings” in life:
- Consciously limit your spending to less than 90% of your take home pay, to allow you to deposit the remainder of 10% or more into a savings account. If you understand the power of giving, then, live on 80% or less, to allow you to able to make donations to your church or other worthy causes. Giving reflects the condition of your soul. As the Bible says, “It is more blessed to give than receive.” Acts 20:35.
- Your first line of defense for those “happenings” in life will be to save at least $1,000, which will cover most of the unexpected events. I prefer to have at least $3,000, since those events seem to happen in a succession of three, which leaves little time to rebuild your savings account.
- Then, delay spending on what you want. Cover your needs while not adding to those needs with more expensive housing, utilities, transportation, etc. Sacrifice a little to save even more.
- Never pay full price if you can avoid it. Know what you need and shop for deals. And, consciously put the savings into the savings account.
- To truly avoid the “debt temptation”, we need to save enough to cover at least six months of our current living expenses. Why? Because most jobs are not secure. We will face a job loss several times over our working career. To get what you need in pay for your next job may take you three to six months to find it. Are you prepared for that?
Win the Battle for Your Future
Yes, we are each a small spec in the big picture of this world. And even though we cannot control what goes on in the world, we can control our personal decisions. Those decisions include who will be our friends and how we will make a living to provide for our needs.
We cannot choose our family. They were connected to us at birth. For most of us that was a good thing, since they loved us, kept a roof over our heads, gave us food to eat, and provided us with clothes to wear. For some, there were more hardships to endure.
Despite all of that, this is your life so make the most of it! There are no guarantees. And, yes, you may have to work harder to put yourself in a better position than others do, who were raised in a more stable household with many good examples related to handling money and less hardship to endure while getting their education, etc.
Do It or Don’t
You have the choice. Start some good disciplines and do them every day. That is easy to do. And it is easy not to do.
Those good disciplines can become good habits that will accumulate to your benefit over time.
If you choose neglect working on disciplines, the effect is not noticeable in the short term. That neglect will accumulate to your detriment over time.
Again, the choice is yours. Plan your day or don’t. Read a book every month or don’t. Take courses to improve your skills or not. Get the education you need or don’t. Get the certification you need or don’t.
Make a point to save with every paycheck or not. Save until you can pay for any emergency that comes up or don’t bother.
These are decisions to be made or not. However, neglect will take you far from your path to a chance for financial freedom.
Simply Do What You Need to Do
Be aware. There are things you need to do to be responsible and build your confidence with handling money. You may fear making decisions because they may be wrong. No worries. Making mistakes makes us smarter if we choose to learn from them. Please do.
I want you to make saving more important to you. Then, you can learn to avoid debt. The credit card companies will be frustrated with you when you never reply to their offers.
Let others pay for laziness. Not you!