“I Don’t Make Enough to Save”

Four Ways We Talk Ourselves into Financial Disaster

You make plenty of money – enough, at least, to allow you to pay bills, eat, get to work, and save for the future.  You even made a budget once; a neat and attractive Excel spreadsheet that organized and allocated your monthly earnings, down to the penny. You even had spending money left over.  Well, you should have, anyway.

But for some reason, no matter how nice and logical that spreadsheet looked, you’re still broke by the end of the month.  In the days leading up to your next paycheck, you routinely find yourself dipping into your steadily dwindling savings account or – even worse – breaking out the credit card (you know, the one you swore you would only use for emergencies from now on) to pay for gas and groceries.

What gives?

People get funny about their finances – even people who are otherwise smart and responsible.  None of us want to have money problems or debt issues – but somehow, many of us end up struggling to get by.  In many cases, we have developed habits or ways of thinking about money that end up hurting us, even as we try to do the right thing.

Are your destructive financial habits keeping you in debt?  It’s possible – especially if you’ve ever caught yourself thinking or saying some of these things:

Thought #1. “My next (car/house/TV) will be (bigger/nicer/newer).” 

Why this is destructive:  While it’s good to have goals (like, say, saving up for a down payment on a house), there’s also something to be said for simply enjoying what you have.  All too often, we look at what we have and see the defects:  We compare our houses and furniture to ones in we see in home décor magazines.  We see our aging, practical four-door sedans and note sadly that they’re not nearly as exciting as the neighbors’ brand-spanking new SUV.

It has TV sets in the headrests!  We say.  Why don’t we have that?

This constant desire for newer, bigger, nicer things makes it really difficult to save money for the things we actually need – like money for retirement and a few thousand dollars (in cash!) in case of an unforeseen emergency.  I’m not saying that you should never have nice things – but I am saying that it’s good to do a reality check every once in a while.  Appreciate what you have.  True financial responsibility isn’t about having the nicest stuff.

Thought #2.  “I’ll start saving as soon as I make a little more money.”

Why this is destructive:  If you don’t start saving now, chances are, you never will.  It’s easy to convince yourself that you just “can’t afford” to put money into savings – especially if you don’t make very much.  But the truth is, savings money is absolutely critical – especially for folks who don’t make a lot to begin with.  Having money in savings can help you deal with emergencies and unexpected expenses.

Plus, the sooner you start saving, the sooner saving will become a habit – so when you do make more money, it’ll be easy to simply increase the amount you set aside.  My advice:  Start saving now – even if you can only afford to put away, say, $10 or $20 a paycheck. Increase your savings gradually.  You might be surprised by how quickly your money adds up.

Thought #3.  “It’s just coffee.”        

Why this is destructive:  Most of us have one or two small vices – we line up for fancy latte drinks, we download a handful of 99-cent songs from iTunes, we sneak cheap paperbacks or magazines into our grocery carts – you get the idea.  We tend to ignore these purchases because they’re relatively small.  Five bucks here, three bucks there – pocket change, really.

But the problem with these little purchases is that they can add up fairly quickly.   The other problem is, because they’re small purchases, we tend to ignore them – until we realize that we spent an extra $30 at Target – and that $30 was supposed to pay for gas next week.

Again, I’m not saying that you have completely deprive yourself of the little things that you love – but I am saying that you should be conscious and aware of just how much these purchases add up.  The best way to keep these purchases in check is to budget for them.  Allow yourself one or two small splurges per paycheck – no more.

Thought #4:  “Everybody has debt – it’s no big deal.”

Why this is destructive:  First of all, when has “everybody’s doing it” ever been a good reason to do something?  Yes, it does seem like most people have credit card debt – and chances are, they’ll be paying that debt off for years to come – at sky-high interest rates.  Second of all, debt is always a big deal.  If you’ve got credit card debt, the worst thing you can do is ignore it or downplay it.

If you’ve got a relatively small amount of credit card debt, I’d suggest that you buckle down and pay it off as soon as possible – and stop using your credit cards completely.  If you’ve got a pretty high amount of debt and you feel overwhelmed, take action – the worst thing you can do is let your problem spin out of control.  Contact your credit card lender and ask about your options – chances are, they’ll be more willing to work with you if you make the first move.  Consider (carefully!) a balance transfer that will give you a lower interest rate.  Take action.

What do you think?  Do you have any destructive thoughts to add to the list?  Have you ever talked yourself into making a bad financial decision?  Ever talked yourself out of one?  Leave me a comment and let me know!