I spent only 4 years in the financial and insurance industry, but during that short time, I took away a lifetime’s worth of knowledge that has benefited my family as well as helped friends in some of their decisions about insurance, investments, finances, etc. I figured that I wanted to regularly share some of what I have learned as from what I have observed in my community and surrounding nation is not very many people are doing well when it comes to personal finance.
So I’m starting a new segment on Fridays (either weekly or every other) called Financial Fridays. It’s as simple as this: I plan to share easy facts that many people already “know” but are helpful to all and will be a hard realization to others.
For the first Financial Friday, I want to share a stat that I heard early on in my short lived financial career that hit me hard in seeing that all adults needed to see, especially young adults and couples. Did you know that the average American individual spends $1.22 per every dollar they earn? Think about that. This stat is from a 2002 CNN study, so sadly it is grossly out of date now as it is reported that the average American household in 2012 has $15,418 credit card debt. Where do you fall in this? How are you doing? How are you doing really?
If you aren’t spending $1.22 or more of every dollar you earn, that is great but you are in the far minority of American adults it would seem. If you are in this majority, here are some tips that I’m sure you have heard, but make today the day that you really put your foot down.
1. What you are buying with credit more than likely is not something you need so stop buying it!
Your desire for stuff is killing you. Really. You are getting buried under mountains of debt for clothes, toys and plenty of other crap. If you continue at the rate you are going currently, you will sink and eventually your habit/addiction will get the best of you.
Sound nerdy? Well it isn’t if you want to have control over your wallet or if you want it to continue controlling you. Sit down (with your spouse if you are married) and look at your personal finances. Look at your monthly income and put a name to every dollar. First thing is Needs: Rent/Mortgage, Grocery/Food, Insurance, Gas/Electric, Tithing, etc. Second thing: Paying down debt or investing and doing wants again.
Going out to dinner is a want. Buying a new video game is a want. Shopping for new clothes is a want. You don’t need them to survive. Grow up and put them on the back burner unless you have disposable income for them.
3. Tell Someone.
The best thing you can do is tell someone about your plan to either get out of debt or to start spending on a budget. Accountability is huge. If you don’t admit to others you have a problem, then no one can come around you and support you. Admit it to someone else or others so they can support you.
These are three very simple and basic steps that can help someone get on the right track. Don’t be in the majority that is spending way over what they are making. Stop, budget and tell someone. There is plenty more you can and should do, but these three ideas will help you start a new and better habit.