Five (bad) Excuses for Wasting Money
Thursday, June 5, 2014
People who are good with money use it to make more money. People who are bad with money, make excuses.
If you fall into the latter category - and let’s face it, so many of us do - the first step in becoming someone who is good with money is to acknowledge some of your less than healthy financial habits. To help you get started, I’ll cover the top five (often terrible) excuses we use to allow us to continue frittering away our hard-earned dough.
Bad excuse #1: But I got it on sale for 50% off. Bargain!
The term ‘bargain’ gets thrown around a lot, and often in the wrong context.
For example, if you need a new lawnmower, know the one you want and find it on sale with a discount of 40% off, that’s a bargain.
But if you fall in love with a ridiculously overpriced and impractical handbag, and it’s reduced from five figures to four, well, that’s not a bargain - it’s a triumph of sales marketing, which has perfected the art of turning need into want.
So, the next time you’re tempted, sit down and draw up a chart of cost versus projected usage. When you combine the two to create an estimated eventual cost per use, that will be the real telling of whether it’s a bargain or not.
For example: I know of one lady who negotiated a ‘steal’ on her yearly gym membership at an up-market city gym. She managed to have three free months thrown in, three personal training sessions and a gym bag, towel and drink bottle – all at an annual rate of $500 rather than the standard $770.
A bargain, right?
No. Unfortunately, she only went seven times during her 12 months. In other words, each gym session cost her $71.43, which is anything but a bargain.
A bargain is only a bargain when you need something and get it at a reduced price, not when you’re paying less for something you don’t actually need!
Bad excuse #2: I’m terrible with money
I’ve said above that the first step in solving a problem is to acknowledge it, and, though admitting you have a problem with money is a good thing, many people use this as line as a crutch.
Truth is, - it’s a poor excuse that’s needlessly wasting the utterer’s precious money.
You know now it goes. “I know I shouldn’t have bought that new TV, but hey, I’m terrible with money, so it’s to be expected, right?” Or “Yes, I can’t afford to buy a house and go overseas, but hey, we all know I’m terrible with money, right?”
While this habit may be presented as nothing worse than an affable personality flaw, there’s really nothing affable about not having enough money to pay your mortgage or electricity bill because you couldn’t resist that new purchase that you didn’t need, but really wanted.
‘Fess up. You know exactly what you’re doing and you’re not terrible with money, just financially undisciplined.
Bad excuse #3: It’s too much effort, I just can’t be bothered
There are many ways to save money in an average day. For example, you could take your lunch from home instead of buying it; you could fill a thermos with coffee instead of hitting a café, or you could catch public transport instead of driving, but all these options lend themselves to the caveat “Yeah, I just couldn’t be bothered.”
In other words, it’s all about convenience.
For example, “I could have caught the bus and saved money on petrol and parking, but I couldn’t be bothered getting up half an hour early.”
But here’s a tip from the experts: It’s in your best interests to learn to be bothered. In most cases it will cost you nothing but time and the payoff should be a bank balance sitting firmly in the black and not the red.
Inconvenience is not a bad thing, especially when it can lead to such significant financial gains.
Bad excuse #4: I could be dead tomorrow
True. And you could also still be alive in 50 years, eking out a miserable existence and looking back in regret at all the money you frittered away.
Yes, we all need a little excitement, and a little indulgence can turn a mere existence into a rather fabulous life, but by not facing facts and spending as though you won’t be around to pay the money back isn’t the answer.
Odds are, you will be around, and by thinking to the contrary – and continuing to spend to the contrary – you’re creating a rather frightening scenario in which even the smallest change in circumstance – from a short illness to a job loss– could prove financially catastrophic, rather than just a mere setback.
So, here’s a better statement: I won’t be dead tomorrow! I won’t be dead for decades, so I better start ensuring I’ll be as comfortable then as I am now.
Bad excuse #5: It’s alright, I’ve got a bonus coming
First things first. Are you 100% sure that bonus is coming – and at that exact amount - or are you counting your chickens before they hatch?
Because, unless it’s in writing or is guaranteed as part of a contract of employment, you may not get that bonus you’re counting on – and, hey, spending against.
But, even if this mythical bonus cash is definitely coming your way, frittering it away before you have it in your hand is missing the point.
Work-related bonuses are generally awarded for extra energy and effort expended, usually over the long term, perhaps over financial quarter or year, so spend it the same way, with the long term in mind.
Of course, sometimes this will mean NOT using it at all, but if you must, do it judiciously.
Perhaps invest it, pay off your credit card or drop the lump sum into your mortgage.
Make your bonus work for you. Treat it as a true bonus, one that will help you pay off something you may not ordinarily have been able to, rather than a means for buying something you may not ordinarily have been able to afford.