Sometimes in today’s society it’s hard to practice good money habits when it seems everyone is spending on the latest this and the newest that.
I would definitely say my parents did a great job instilling the importance of fiscal responsibility when we were growing up. We didn’t buy things we couldn’t pay for. PERIOD. They always said if you can’t pay for it when you want to buy it, then you aren’t ready to afford it. This was very practical advice and because of them, I really didn’t get into some of the financial problems that many unknowing young adults face – i.e. the black hole that is credit card debt. (This is not to say I didn’t carry a “quite low” bank account balance at times through college, but I made sure that it wasn’t a red number! ha!)
If things got tight, my parents didn’t really bail us out, but instead made sure that we learned from any mistakes we made. As a result, I would say that today my husband and I do a pretty good job of keeping a handle on our finances now and living within our means.
However, there will be times where I just want to go out and blow some money. This urge often happens when we come into a chunk of money, whether it be from a bonus coming through or a big tax return or some other windfall. I immediately start “mentally preparing” what I want to spend the money on. And it’s not all of it, but just a meaningful chunk that I normally wouldn’t spend – whether it be a couple hundred bucks for shopping or a couple thousand for a household upgrade.
When this happens, I often make a bargain with myself. I allocate a small dollar amount to satisfy the urge to get something new. But try to keep it small and then I put the pressure on myself not to spend. How do I do this? Well, I transfer most or all of the money to our “big savings account” (the one for medical emergencies or saving for the next house/car). See, once that money is in there, it’s basically off limits to me, we never touch that money unless we are doing a big purchase.
To really keep myself in check, sometimes I’ll transfer more than the “windfall amount” so it puts me at a smaller checking balance than I started – and often below the minimum we like to keep in our account. Then I really feel the squeeze to reign in our spending until we get our balance back up to our checking account norm. It puts a little pressure on us to make sure we’re really tight with where our money is going. And sometimes I just need to do that for a couple weeks/months – keep things in check and make sure we’re regularly keeping our finances in order.
What do you do to make sure that you get some fun money (but don’t blow it all) and practice fiscal responsibility?