We all have a tendency to live day to day based on habits. Some of these habits are good, and some of them lead to destruction.
If we focus on the moment, the consequences of our actions might not be visible. But what we decide to do or not do now affects how our future can look.
By making smart financial decisions now, we increase our chances of creating a bright future.
I struggled with everything mentioned in this article at some point, and I’m learning that these choices are not giving me what I want out of life. My focus is on staying debt-free and investing in our future.
This article is not meant to judge anyone who struggles with these problems. I’m as guilty as anyone. But writing these thoughts down helps me learn from my mistakes, and I hope it helps others.
Spending More Than You Make
We each earn a certain amount every month. By spending more than you make, you are creating a disaster situation that will limit your options.
- You will pay credit card interest charges.
- Your net worth will be getting worse over time.
- If you miss a credit card payment, your credit score will go down.
- Managing your finances becomes more challenging.
- You set yourself up for deciding between not very good options: paying down high-interest credit cards or investing your money. In either case, you will lose money.
- Spending more than you make is not sustainable over the long term and will lead to a financial disaster.
How we spend money can give us insights into core problems. Why do you need to spend more than you make? Looking at the “why” behind our choices can help us address what is going on.
There are situations where people are spending more than they make out of necessity, which could be from health reasons or other legitimately bad scenarios. I’m mainly talking about how we are spending stuff that we really don’t need, which I think is usually the case (it was for me).
The best way to avoid spending more than you make is taking a look at what you are bringing in and figuring out how you want to spend your money. You can do this by figuring out a budget system that works for you and your family.
The beauty of a budget requires that you prioritize how you spend your money, which is the best way to pursue financial goals. Gambling your future is not worth it!
Having a budget is more vital in marriage because it helps you get on the same page.
There is no right or wrong way to budget, and different methods might work better for you. I prefer using YNAB (affiliate link) as it automates some of the work and details how we are spending money.
No Emergency Fund
A rainy day stash of cash sets us up to roll with life as it happens. Does it guarantee a prosperous future? No, but it can prevent many situations that would lead to consumer debt.
We are essentially setting up a safety net that we can depend on if the following happens:
- Losing our job(s).
- Encountering major health problems.
- Being able to replace a vehicle in unexpected situations.
- If one of your children is kidnapped and we have to pay a ransom.
How much cash you need available will depend on your situation. If you are married and both of you work, you might want less. If you are not confident in holding your job for whatever reason, you might want to increase the amount. Most people would recommend having 3-6 months of base expenses stored away just in case.
Once we get consumer debt-free in the next few weeks, our priority is to build our emergency fund.
The idea is that once you build your rainy-day fund, it should just sit there and never get touched. You may end up wanting to adjust the balance periodically as your situation changes. But once built up, the safety net will hopefully be there forever, and you won’t need to touch it. But if something horrible does happen, you know you can depend on those funds.
Not Optimizing Your Employment
The longer we work, our value as an employee should increase, equating to raises, or better job opportunities. Learning to optimize your career should ultimately mean more money over time.
It isn’t just about more money. It is about reaching financial independence as fast as possible, so we have more options to do what we want to do. Which might mean you keep your current job. But it also could mean quitting earlier to travel more. Or spend more time with family.
The more you enjoy your career and what you do with your time, the easier it is to skyrocket your income.
It is also about setting up your work situation to enjoy it as much as possible. The more you enjoy working at your job, it increases the quality and the chance for more money. If you are going to work, why not get the most out of it?
My employment is one area I’ve done well. People depend on me to get shit done and to optimize my time. I want to continue this trend throughout my working career.
I love tv. I used to watch several hours of TV every day. But what value is sitting on the couch and eating junk food provides? It is all about balance. It is a great way to unwind and relax, but when it becomes the primary way you are spending your off time, you should consider whether it is taking you where you want to go.
It isn’t like we should never watch tv or enjoy a show like Breaking Bad. But we need to think about the quantity of time we invest in these types of activities that don’t help our future.
I’m not trying to set a standard where a fixed amount of tv is too much. But I’m trying to figure out what things I spend most of my time doing that don’t push my goals forward. I enjoy dramas because they take me out of the stress of my life. I’ve watched too much tv over the last five years and haven’t gotten much out of it. I’m trying to cut back and focus on things that will provide a better return on my time.
Not Being Self Aware
If we aren’t thinking about what has worked or not worked from our behavior, we set ourselves up to repeat our past mistakes. Reflecting on what you have accomplished can give you an idea of how your future will look. And if we are honest with ourselves, we might realize that our choices lead us towards destruction.
When we stop to think about our choices, we start seeing where those choices will lead us if we continue on that path.
It would be a travesty to get to the end of our life and be surprised by where we ended up based on our behavior (unless, of course, we do better than what we hoped to accomplish).
It isn’t about focusing on the past so much that it put us into a despair funk; it is about not repeating the same mistakes. I have continually gotten into credit card debt, and I don’t want those mistakes to continue.
Not Thinking About Your Future
When we become aware of how our future could look, things become exciting. We may not be fully aware of what we can accomplish until we start thinking about the future.
Even if we aren’t at a solid spot now, that doesn’t mean the future has to look that way.
And that is the beauty of looking at our choices. Smart decisions now can have drastic effects on our future. This relates to my last point about being self-aware. Still, I think it deserves individual attention because thinking about the past, and the future can remove the mental roadblocks we set up for ourselves.
Reading allows us to learn things we don’t know. Reading blogs, informational websites, and books can be enlightening. Many people have encountered our situations and have figured out how to move forward.
Reading can help us learn new ideas that can challenge our perspective. We have to pursue this knowledge to figure out what we don't know.
In 2018 I started reading more blogs and books, and it has ultimately led to launching Money Stir.
Ignoring Your Marriage
If we make all the right choices, but we don’t prioritize our life partner, what are we pursuing? The future I envision and want to reach includes Andrea because I want her in my future.
Part of my motivation for reaching financial freedom is to make great memories with my spouse. I don’t want to have all of this free time to myself! That seems boring and depressing.
Learning to be a better husband and partner helps our relationship and financial future. We each have dreams, and I want both of us to be happy together. I've made tons of mistakes in our marriage that I want to avoid in the future.
Buying Expensive Cars
What value does a $50,000 car give you? If we look at vehicles as objects to get us from point A to point B, we can see this is an area where we can save money to put towards financial flexibility.
And when we purchase expensive things that depreciate, we instantly limit our future options.
A $5k-$10k used vehicle can provide me with the comfort and utility I want. Maybe we will get to a point where spending more money on a newer car will make sense. But at this stage, the cost isn’t worth it.
Getting out of the cycle of having luxury vehicles can save cash. These expenses tend to lead to other expensive purchases and usually don’t end up making us happier.
Buying Expensive TV’s
Oh boy, do I love expensive TV’s! And pretty much all electronics. But they can be worst than cars because technology is always improving, and they can depreciate faster.
The temptation to always have the latest electronics can majorly drain your bank account. And are they helping you reach your goals?
We shouldn’t feel guilty about these purchases. But we need to put them into context with our current goals. Which could mean saving small chunks of money over a more extended period to purchase something we want. Maybe it is a new computer or the latest 4K HDR tv.
We want to avoid the death cycle of feeling like we have to purchase the latest technology to be happy. Learning to enjoy what we have is a skill that will save us money and make us think about what is worth the cost. I have spent a lot of money on expensive tv’s in the past that we couldn’t afford, and I’ve 100% regretted those purchases.
It is much better to own something that you can pay for with cash and not debt. When it takes you 1-2 years to fully pay for a TV, there is something about that purchase that stings. You aren’t just purchasing an item, but you are also taking on those extra payments and spending future income. Is that new $5,000 TV worth two years playing catch up?
Purchasing a Large Home
Do we need a 5,000 square foot house to be happy? Maybe. But expensive homes can be much more than a big house. Often it means living in an expensive neighborhood that sets higher standards and temps us to spend more money on luxury items.
Having a larger home than what you need has disadvantages:
- More expensive to maintain.
- Harder to clean. Cleaning four bathrooms vs. two is more work.
- A larger house requires more stuff to fill it!
- Even if you can afford it, having a more substantial mortgage payment means less money to invest or use in your budget.
- Large homes often require more substantial down payments, which could limit how much money you can invest and how soon you could sell to break even or make money.
More doesn’t always equal better. And the house we decide to live in can drastically affect our future. When you buy a home, it is harder to change without a lot of work and stress.
We built our home about four years ago. We have a fully finished basement and an upstairs area. It is a great home, and there are some upgrades that I don’t regret (kitchen and master bath). But I do wish we got a smaller home that had larger shared spaces.
Eating Junk Food
Boy, do I love Cheetoh’s! But it isn’t great fuel for my body, and it is expensive. I noticed that the more tv I watched, the more junk food I consumed.
When you start eating healthy, it can have a ripple effect on your whole life:
- Buying less processed foods saves money.
- Affects your mood.
- Eating healthy can improve your sleep schedule.
- Do I need to mention the health consequences? Higher risk of obesity, depression, digestive issues, heart disease, stroke, type 2 diabetes, cancer, and early death.
The cost of eating large quantities of junk food is disheartening. But are these tasty morsels worth sacrificing or shortening your future?
It isn’t that we can’t ever eat Cheetoh’s or go to McDonald's. But we should limit these types of foods because they affect our health and finances.
I’ve gotten better about not eating as many sweets and junk food over the last few years. But I can do much better.
Moving our bodies helps maintain our health. It becomes even more critical if you work at a desk. It might not be evident how this can affect your financial future. But if our bodies get to a spot where they can’t move, our income potential vanishes, not to mention the added medical bills.
And it isn’t just about extra financial costs. It is about how we feel. When we wake up everyday feeling happy, it becomes easier to make smarter choices. Our minds become stronger and more efficient. We become the best versions of ourselves and are less likely to compromise our future.
Working out can be tough because putting your body in intentionally stressful situations can seem crazy. Why would I want to pursue something so uncomfortable?
It comes down to keeping our physical condition as healthy as possible to prevent other problems and set us up to make smarter decisions.
The wealthy accumulate money so their money can make them more money. But we can’t do that if we aren’t investing, which doesn’t necessarily have to be the stock market. It could include spending money to start a business or creating a blog.
And when we start investing and seeing our money grow, it can motivate us to earn and save more.
It also can change how you look at your money. Each dollar becomes a little employee that can make you more money. The more employees you can attain, the more they can produce, which opens up your options.
I have not done a good job of investing and saving money in the past. But this is going to change. In 2019 we would start investing large amounts of cash after paying off our credit card debts and saving an emergency fund.
Avoiding these bad decisions will help secure your financial future. I’m not going to let these bad choices dictate how my future looks.
Being aware of our weaknesses and the consequences of our choices can help us change directions. Learning to optimize how we spend our time can drastically change our destination.
Instead of reacting to bad choices, why not set ourselves up to respond to our good decisions? When we start making smart financial decisions, that can motivate us to make other good choices with our money. And this could change our future immensely!
What bad habits have you learned from life? Can you relate to any of these bad habits?