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Your Budget: Rethink Modern Day “Necessities” – Part I

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Compare your monthly expenses to those of your grandparents (maybe even your parents), and you’ll probably find your expense list is quite a bit longer.  Over the decades, more and more conveniences, habits, and gadgets have found their way into our everyday lives.  And gradually we’ve accepted them as normal, even necessary.  (For instance, who thinks twice about paying a cell phone bill – talk, text, and data – these days?)

If we’re honest, we’ll admit most of these things don’t make us happy.  (Certainly, the personal debt burden doesn’t.)  It might be time to rethink our expenses and “pay attention.”  We all know we should spend less and save more.  When you cut out some big ticket items that we seem to think are necessities – but they really aren’t – you’ll have a lot less stress and more financial breathing room.

This is a spotlight of 10 modern day expenses that might be keeping you from financial freedom:

  1. Big fancy home:  You see gorgeous pictures of others’ homes on TV and Facebook and think – My home needs to look like that too!  Newsflash!  Most people don’t live in spacious picture perfect homes, regardless of the impression social media may send.  And even if they do, are they really happier than those in smaller, more modest homes?  Moreover, consider why you want to upgrade your living space, is it because you’re a six-person family in a two bedroom house?  Or is it because you just want to impress the occasional visitor (who, if he or she is a true friend, won’t care about the size or lavishness of your house anyway)?  If you already own “too much home,” you might downsize to a more modest (and less expensive) one – and purge a lot of your extraneous possessions while you’re at it.  One unexpected benefit is that you may find that your friends are envious of the fact that you’ve been able to simplify your life.
  2. New car:  If your neighbor just got a new car, you may find yourself thinking – My car is 6 years old . . . maybe it’s time for a new one.  But ask yourself, is my current automobile impractical because of the size, poor gas mileage, or the fact that it requires a steady string of repairs?  If not, take a step back and remind yourself – My car will last another 6 years if I maintain it, and maybe longer.  I do not need a new car.  I want to be financially responsible, which requires saving and investing my money wisely.  Then, focus on the things you can do with the money you’re not putting toward a car payment.
  3. More clothes, shoes, and accessories:  Many of us want to look stylish and trendy, and some of us even view shopping as a form of entertainment.  Problem is, a frequent shopping habit isn’t easy on the wallet . . . and it’s likely that most of your purchases languish in your closet, where they’re rarely (if ever) worn.  So the next time you feel like hitting the mall, ask yourself if there’s anything you really need.  If not, resolve to wait – perhaps until the next seasonal change – to add to your wardrobe.
  4. Expensive, exclusive education for your child:  If the tuition is way over your head, it’s time to look into other options.  Remind yourself that private schools and colleges often don’t deserve the prestige their PR departments have created.  (And while your child’s future is important, you need to be saving for your own retirement – a fund may well-meaning parents neglect while funding their children’s education.)  If your family decides to take out college loans, make sure some of the loan balance will be repaid by your child.  Knowing that their education isn’t a freebie will make it more meaningful to them – and may also sharpen their motivation to graduate in 4 years!
  5. Over-the-top gifts:  Every holiday season (and birthdays and special occasions) you overspend on gifts and are left with a financial hangover when your credit card bill arrives.  You need to have an honest conversation with yourself.  Do you think the price of a gift has any correlation with the appreciation from the recipient, or with how your friends or family feel about you?  It is important to set a budget for holiday gift-buying and to think creatively about gifts (or better yet, plan special experiences instead of purchasing gifts).


To be continued . . . . . . . . .

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