Other • 4 ways we deceive ourselves to keep spending
4 ways we deceive ourselves to keep spending
By Krystal Yee | Mon Jul 09 2012
No matter how good we think we are at managing your finances, we are all guilty of lying to ourselves from time to time to justify indulgent spending. While splurging on occasion is healthy, one of the keys to financial independence is to stop making poor spending decisions and unnecessary purchases.
Here are four common ways we justify unnecessary spending:
I work hard, so I deserve it
A few weeks ago, I was in Prague for a couple of days. As I waited in line for a tram, I overheard two 20-something women discuss how they couldn’t afford their six-week trip, but they were happy they did it because they “deserved it after a hard semester.” They each financed their trip with a credit card, and fretted for a few moments about how they planned on paying it back. “We’re young!” one of them said. “We only live once.”
Luxuries like vacations are a good thing if you can afford them. If you can’t pay for it in cash, wait and save up for it until you can, or go for a less expensive option. The last thing you want is to have to continue to work hard into your retirement in order to pay off all of the things you thought you “deserved” along the way.
The savings aren’t worth it
Most of my friends don’t comparison shop. They don’t clip coupons, they don’t ask for better rates, and they don’t bring back receipts for price adjustments because “the savings isn’t worth it.”
A few years ago, I was speaking to a friend who had about $4,000 in a “savings” account that offered 0.05 per cent interest. On top of the low rate, she was also paying a monthly fee for her chequing account. I asked why she didn’t move her money to a bank with a higher interest rate (at that time, PC Financial was offering 4 per cent interest) and free chequing accounts. She replied by saying, “it’s not worth the hassle, and I don’t need the extra money.” Even though she was in debt, she wasn’t willing to trade a few hours of her time in exchange for a free monthly chequing account or a higher interest rate.
When you take a little bit of time each month to go over your finances to make sure you’re getting the best prices on the items and services you pay for, you could potentially save hundreds of dollars each year.
It’s an investment
Sure, you might need new clothes and shoes when you land your first job out of school; looking professional truly is an investment in your career. However, buying a $500 pair of shoes is not an investment. A true investment is something that will make you money over time, not plummet in value the moment you leave the store.
It’s a once-in-a-lifetime opportunity
If I indulged myself in every “once-in-a-lifetime” opportunity that has come my way, I would be broke. However, when something fun and unique comes along, it’s hard to say no.
Nearly 10 years ago, a friend asked me to go backpacking in Asia for a summer. “We’ll never get to do something like this again,” she said. I turned her down even though I wanted to go. I was a student with a limited income – plus, if I could have somehow come up with the money to fund a trip to Asia, it would have been better off put towards my debt. Spending money to increase my debt load (while decreasing my net worth) didn’t make sense to me.
What other lies do we tell ourselves in order to justify spending we can’t afford?
Statistics: Posted by yoda — Wed Jul 11, 2012 12:12 am
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