“I’m just bad with money.” That was my excuse of choice. My friends spoke of my frequent “banking emergencies” with laughter. It seemed I was always running to the bank to cover a check or to withdraw money to make an emergency payment. It was a never ending cycle of embarrassment and banking fees.
As the debts piled up and the money ran out, I realized I had to change my situation. Like many people, I thought if I simply earned more each week I would be ok. It wasn’t true. More money in my bank account just gave me a false feeling of security. I can mismanage large sums as efficiently as the small ones. I’m just that skilled!
In time change was forced upon me. Maybe you are in the same situation, receiving collection calls and paying more in fees than in actual purchases. If so, there’s hope. I’m going to share with you the five myths that kept me from managing my money successfully. I learned to manage money and I’m confident you will as well.
“I’m not good with numbers. I can’t manage my money.”
I discovered skill with numbers is not required to manage money. Money management simply comes down to spending, saving, and decision making. That’s it. If you’re like me, you already have the spending piece mastered. Saving and decision making are the real challenges.
Saving is essential. Before you spend, you need to save for unplanned emergencies, purchases, and repairs. I used to save if I had anything left after spending. This is backward thinking. Set an amount and save it when you receive your paycheck, the same day if possible. Don’t touch your savings except in an emergency.
Make careful decisions. If you’re like me, you make buying decisions quickly based on emotion. Good money management requires you to change the way you buy. Never, ever purchase anything on a whim. Impulse spending is one of the fastest ways to get into trouble.
“Budgeting takes a lot of time.”
Setting up a budget takes a few hours, not the days of mental anguish I pictured in my mind. One of the best ways to budget is to track your expenditures for one month. Just write down what you purchase every time you spend money. No trouble at all, really.
Now that you have a record, divide your spending into categories. Common categories are food, clothing, living expenses, travel expenses (such as gasoline), entertainment, and miscellaneous. This is where your money is going every month. It was an eye opener for me, I admit.
The last step involves difficult decisions but not much time. Decide where you money ought to go, and divide it appropriately. You may find that in order to save you need to cut back on entertainment or clothing. Record your new spending amounts and simply follow this plan. Now you have a budget.
“I don’t want to deprive myself.”
I mistakenly believed that I could avoid difficult choices by avoiding budgeting and money management. I learned the hard way that my resources were limited and every paycheck only covered a portion of the bills.
If you don’t make hard choices and go without something now and then, the choices will be made for you. When you run out of money, you run out of options. I would rather deprive myself of a new dress than go without electricity for a month. It’s really that simple. If you don’t feel you are strong enough to control your spending and make difficult choices, look into debt planning or a debt management program. Let someone else help you.
“I don’t know how much I’ll earn each month. There’s no way I can manage my money.”
As a freelance writer, I often don’t know what my earnings will be from one month to the next. While I tell myself that my earning potential is unlimited, this is simply not true. One of the contributing factors to my debt crisis was my belief that I couldn’t manage a variable income.
Guess what? It’s simply a matter of delayed gratification. Here’s how I manage my variable income. I’ve listed my monthly expenses in order of importance. Living expenses and food top the list, followed by other general life requirements. Entertainment comes last. Each month I work my way down the list with the money I receive. I delay entertainment until the end. At the end of the month, my leftover money is used for entertainment the following month. It works for me.
“I just can’t do it.”
Bottom line, you can do it. When I said I couldn’t do it, what I really meant was I didn’t want to do it. My financial situation didn’t change until I decided I could manage my money. Start telling yourself “I will do it.” Then get busy.
About the Author
Anne Hunter is a freelance writer who manages her variable income very well. Her writing career thrives during the months when her budget doesn’t allow entertainment or discretionary spending. Through it all, Ms. Hunter has learned from debt resources and maintained a debt free lifestyle, a significant achievement considering her past brush with an individual voluntary arrangement.
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