Monday, 6 February 2012

Penny Wise, Pound Foolish!

It's that time of year!  Many of us are just getting over the Christmas credit card bills, when the New Year Sales start and graciously help to get us into even more debt.  

I have come to appreciate that realistically, the only way sales are a bargain and we are genuinely saving,  is if we are paying cash that we can afford to spend on those 'sale' items.  If they have to go on credit and take years to pay, then there is no saving at all.

Funny how even if we have a trailer load of clothes, shoes and pretty things, we cannot resist a bargain in the New Year Sales.  After all we are saving right?  Well no, not really.

You see what we tend to suffer from is PWPFS (Penny Wise, Pound Foolish Syndrome).  Worse still we tend to buy in excess to keep up with other people's expectations.  As Benjamin Franklin said 'If all the world were blind except myself, I should not care for fine clothes or furniture.'  If we were not so concerned with keeping up with the Jones', we would actually be OK re-working our wardrobe, and last seasons shoes and bags, instead of having to get the latest Prada accessory and paying the high street bank twice over for the pleasure.

I am a recovering PWPFS sufferer.  I still have relapses, but I have given myself this year - 2012 to kick that bad habit.  You see when I reflect upon how much better off I could have been if I applied some basic fundamental money managing strategies, I pinch myself.  In fact I drop-kick myself!  I know for sure that if I had been sensible with my money during the past 14 years that I have worked full-time in well paid jobs, I would have had a nice nest egg to support me today - I know this!  Perhaps I might have even been financially free.  They say hindsight is 20/20 vision right?

Women in particular lack common financial sense. OK, that is a sweeping statement, but I have many friends that are earning good money.  Some are earning several hundred thousands of dollars.   They have nothing to show for it.  Not their own home, not a college fund for their kids.  They have a fine wardrobe, all the latest gadgets, but no assets whatsoever.  How is that so?  Why is that so?

Unfortunately we are taught things in school that do not prepare us for surviving in the real world.  We need to be taught social interaction, saving for a future, provided with information on taking care of our finances.  Instead we are taught algebraic equations.  

In actual fact, money matters should be taught in the home. Let's make a difference if we are not already.  Maybe if more of us had that training at home we would not be getting mortgages beyond our means and giving the banks leverage to ruin the economy as is speculated. Give your children, nieces & nephews, little cousins hints and tips on saving.  Open an account that they cannot touch until 21 and encourage them to save regularly instead of buying them a Nintendo DS.

There is no reason to remain financially ignorant, it is time to teach yourself and everyone you care about.  There are 1000s of books and online tools. Some books date back hundreds of years.  Themes are common.  The main ones being spend less, save more.  Spend less than you earn.  Save a minimum of 10% of your earnings.  All achievable things if we are mindful of them.

So sit down, write a list of what you spend every day for the next month.  Look at that list and see what is essential.  What you can do without, then try and do without those items for the following month.  See how it feels to have saved, even if it is a minimum amount.  It can be something as simple as not going to your coffee shop and buying a skinny latte every day right?
I am on a mission to tell all my friends to get their financial stability groove back.  Be in a position to help yourself and others to keep your heads well above water.  Shoot! You should position yourself to walk on water and float financially.

In essence, no matter what you earn, spend less always!


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