Music Mondays - Out of Touch
Out of Touch with Your Financial Reality?
A few weeks ago, I received an email from Best Buy and the subject line read “You deserve it!” I literally laughed out loud reading this thinking that Best Buy has no idea what I deserve and no right to convince me that I deserve something, especially from their store. However, once I stopped laughing, I wondered how many people got the same email and didn’t laugh, but agreed with Best Buy that they deserve it.I used to be one of those people who felt like I deserved “stuff,” and I realize now that it was just because I was out of touch with my financial reality. I spent most of my 20s and the beginning of my 30s out of touch with my financial reality and said a number of things, like “I deserve it!” that only proved just how out of touch I was. In case you are wondering if you’re out of touch, here are some things that someone who is out of touch with his or her financial reality might say:
Sayings that Prove You’re Out of Touch with Your Financial Reality
1) "I deserve it!"
I rationalized a number of purchases in my life by saying that I deserved them, and it’s an easy rationalization to make; however, why do you really deserve something? For me, I assumed that I deserved something because I worked hard and as a result of working hard, I deserved a reward.The reality is that I worked hard, but that’s part of life. We all should have a strong work ethic and try to make as much money as possible. However, just because we work hard to make money, doesn’t mean that we should make it easy to spend money and saying you deserve things makes it easy to spend your money.Many of us think we deserve things because we see the equation like this:
Work Hard + Make Money = I Deserve to Spend It
What we really need to think is:
Work Hard + Make Money = I Deserve Financial Security
Instead of things, what we all deserve is the ability to live a fulfilling and enriched life without having to worry about money, and the more we spend under the guise of deserving, the less fulfilling our lives. The only time you can really declare that you deserve something is if you saved for it in advance and incorporated the purchase as part of your overall financial life goals.
2) "I need it!"
I used to be guilty of this all the time, and I see this rationalization as a big problem for many of my clients. When we go through my client’s spending together I hear a lot of “Well, I needed to get my hair done.” “I needed a new suit.” “I needed a new computer.” “I needed a new screen door.”In some instances, these may have been real needs; however, in reality most of them fall under the category of wants instead of needs, and it’s really easy to get the two confused, especially when you’re out of touch.What I suggest for my clients is to stop before making a financial move like buying something you think you need and wait a few weeks or months. During that time, reflect on how much you really need that purchase. Has the absence of the purchase made your life more difficult to live? In most cases, if you just wait for time to pass, you will realize that what you thought you needed was really not that important for your day-to-day living.The fact is, we really only need something when it’s life or death. Most everything else is a want, and if it’s a want, there is probably a solution for how to live without it or how to get it for less.
3) "I‘ll pay for it later!"
The ultimate in out of touch thinking is saying that you will pay for something later. I am a big proponent of credit card usage, especially when you get rewards from the cards that you’re using; however, I’m not a fan of using them when you don’t have the cash to pay for something.I have a number of clients who get into credit card problems because they assume they will pay for something later. The problem is that usually some other financial need will pop up and their credit debts continue to grow higher and become more difficult to pay off.If you don’t have the money in your bank account to pay for the purchase, you should avoid buying it, and a good best practice to avoid mounting credit card balances is to use credit cards for purchases, but then pay off the balances more frequently. I know some people will argue that they should keep money in their bank accounts and earn interest, but you aren’t earning much of anything in your bank account now and you run the risk of paying more in credit card fees if you can’t keep up with your charges.