When considering the lifetime of people, regardless of our educations, most people could live comfortably with the income they have earned by their retirement, but they don’t. The problem isn’t with how much income we earn– our problems exist precisely with the issue of what we do with our income once we earn it.
This brings me to the subject of compulsive spending. The most unwise spending that Americans partake in. It can decimate your lives; I hope it isn’t decimating yours. To see just how much stuff I don’t need. Every man runs the risk of being destitute who spends more than he has: by contrasts, every man avoids putting himself in a precarious situation who spends less. So what is the best way to build a fortune? Don’t waste it.” Sadly that is not the philosophy of compulsive spenders. Rather consciously or unconsciously compulsive spenders rationalize there is no limit to the things they can spend their money on, and there appears to be no limit to the excuses they can come up with to justify unwise spending.
The problem is that we forget to make ourselves just as important as those who are competing for our hard-earned dollars. When we notice ourselves doing this, we’ll need to find a way to slow your jets. Or you can be in for a bumpy ride to land on the financial runway that could destroy you; it could be too late to start thinking about saving and investing part of your income to build a significant amount of income to enjoy life when you are ready to reap the rewards of your responsible spending.
Frequent excuses for unwise spending are:
- It was a new item on sale.
- This is the latest in (fashion, technology, efficiency).
- I was lucky to find this one – they only had a few left.
- Everyone at the office uses one of these.
- I really got this for both of us.
- It has great resale value.
- You need one of these in my line of work.
- These type of things have become one of life’s essentials
in today’s life.
- We need this because the one we have is (too slow, too small, too old).
Why is saving so critical? Various reasons come to mind.
1. Without a basic savings account–an emergency cushion – you might be continually stuck in a cycle of debt.
- Saving is synonymous with peace of mind, greater options, and power: the power to leave a dead–end job or a bad relationship, or to avoid difficult circumstances altogether.
- If you can’t save, you cannot invest. And investing– whether in stocks, bonds, mutual funds, real estate, or commodities– or preferably some combination thereof– is the cornerstone of building wealth. Saving and investing is the only way in which your income will not only keep pace with inflation and taxes but multiply.
Part of all you earn is yours to keep. Learn to live on less than you make and save the balance for yourself. That does not mean you have to be a cheapskate or ascetic, but rather a responsible spender. Responsible spenders take their earnings and put them to work. It is no wonder their nest eggs continue to increase and they can rightfully start to enjoy themselves earlier in their lifetime based on how they invest their money, oppose to waiting for the retirement age of 65, to have more discretionary finances, time and freedom.