Are Your Spending Habits Bankrupting You?

Are you one of those people who believes that you know where your money goes and that you don’t need to write it down in order to keep up with it? If so then I want to issue you a challenge to you. Keep track of every penny you spend for one month, and I do mean every penny, and you’ll be shocked at what you’ll see!

Those itty-bitty expenses can add up and will take its toll on you. And before you know it, you’ll be broke and won’t even realize what hit you. Don’t believe me? After your month is up take a look at what you’ve spent and then total just one category of something unnecessary such as your morning Starbucks or that daily $8.00 lunch meal. Multiply that number by 12 (for the months in a year) and then multiply the result by 5 to represent 5 years.

OK… if you want an example I’ll do the numbers for you. Let’s say you eat lunch out every day and that it runs you anywhere between $6.00 to 10.00 a day. This averages out to $8.00 a day. If you work Monday through Friday then on average you’d eat out at least 21 day out of the month, give or take. That comes out to $168.00 a month. When you multiply that times 12 months you get $2,016.00 a year. And over 5 years you would have spent $10,080.00! If you add up the interest you would have made, that’s enough to pay for a year of state tuition for a child!

This is only one thing you spend your money on. What happens if you also apply this to your daily coffee or that “occasional” drink? The numbers begin to add up! That’s the very reason why I stress the importance of having a budget.

It’s important to remember that the little things really do count. Cutting out what you spend on lunch, giving up that weekly manicure, or taking the bus or train instead of driving sometimes… do you see what I mean? It really IS the little things that count and all you need to do is make a few changes to get yourself on tract.

Answer these questions truthfully:

1. Does your spouse or partner complain that you spend too much money?

2. Are you surprised each month when your credit card bill arrives and you see how you’ve charged much more than you thought you had?

3. Do you have more shoes and clothes in your closet than you could ever possibly wear?

4. Do you buy a new gadget before it has time to collect dust on a retailer’s shelf?

5. Do you buy things you didn’t know you wanted until you saw them on display in a store?

If you answered “yes” to any two of the above questions, you are an impulse spender and you may need to indulge yourself in some retail therapy!

This also proves my point that chances are you are not on any type of a budget and your spending habits may be slowly bankrupting you. Of course this is not a good thing because it prevents you from saving for the important things you want in life such as a house, a new car, a vacation and especially your retirement.

Starting today you must set some financial goals, set up a budget and resist spending money on items that really don’t matter in the long run. Those goals need to be specific, both long and short term. And remember - there are no wrong answers here. If it’s important to you, then it’s important period.

If you want to be able to make a down payment on a house, start a college fund for your kids, buy a sports car, take a vacation to Aruba… anything… then that is your goal and your reason to get a handle on your financial situation now.

When your spending is out of control it will not only put a strain on your finances but your relationships as well. To overcome this problem the first thing to do is learn to separate your needs from your wants.

When you go shopping, make a list and take only enough cash to pay for what you have planned to buy. Leave your credit cards at home. If you see something you think you really need, decide if it will benefit you financially and if not then give yourself two weeks to decide if it is really something you do without.

Once you can manage to get control of the small expenses in your life that really don’t mean much, you’ll have a greater chance of creating the type of financial success in life that you want and deserve! Then you’ll quickly be on your way to having financial freedom.

Get your free budget worksheets here.

To Your Health, Wealth & Happiness!

Pam Lawhorne

Pam Lawhorne is a serial entrepreneur, small business expert and creative marketing consultant, who provides advice, guidance, and encouragement to aspiring CEO's around the nation in her popular seminars and publications. She is the Chief Empowerment Officer of Empower U, Incorporated, a training and consulting firm that specializes in interactive workshops, seminars and coaching programs.

Ms. Lawhorne is the author of “From Minimum Wage To Getting Paid! - How To Become A Successful Entrepreneur With No Money, Education Or Experience!" and she is also a syndicated columnist who writes articles on empowerment, entrepreneurship, personal development, creative marketing and real estate investing. Her articles appear nationally in newspapers, magazines, and on numerous business websites and on-line publications. For additional information please visit her website: www.PamLawhorne.com.

The above article is copyright 2003-2008 by Pam Lawhorne. Permission to repost is freely granted so long as the text is not altered in any way, and the copyright and links are included.