This is the first post in my attempt to get a better handle on my financial self. I guess the first step in this process is that I should explain a bit about what I mean by my financial self. What my financial self is to me is how I interact with money, how I spend it, why I spend it and the reasoning behind the financial decisions that I make. This goes from the impulse buys such as a coffee or a chocolate bar all the way to the big-ticket purchases like cars. Anything and everything to do with money is intricately tied to my financial self.
How do I spend my money?
Well I buy myself the things that I need and pay for the bills that need to be paid like everyone else. I pay for part of a mortgage and for groceries in these items I’m not much different from the wealthiest of people. We all have bills and expenses that we have to pay for regardless of who we are. The necessities of food and shelter have to be covered, but what about the other items such as credit card payments? And phone bills?
Are all these expenses created equal? Not in my mind. For example I often find myself treating credit like money in my pocket rather than what it is. When I got my first credit card I was very conscious about putting any money onto it because I didn’t have any income. When I started to bring home a paycheck I started spending it and when I ran out of money I would simply use my credit card knowing that I was going to have to pay it back someday. It was a small limit so I never worried about it. Over time this small limit grew but I kept using the cards. I spent money I didn’t have and I wasn’t ever really conscious about it (except maybe for a day or two before my next pay would come in).
This leads me to the next point about spending the money. Paying for the necessities is one thing, we’ve all got to do it (unless we’re kids living under our parents wings). But I was making a decent living and still living at home for a good chunk of this time and I was spending money all the time. I really didn’t have much to show for it. So what was I doing?
I was thinking about this for the past few days and it really dawned on me that I bought a lot of stuff out of impulse, some of it was simply frivolous spending for the sake of spending. Surprisingly there was very little thought that went into how I was spending money. Now before I get too picky some spending of this variety really isn’t bad as long as it’s within limits. In essence I was spending money for the sake of spending money.
Then it hit me I was spending a lot of money as a form of escapism without really seeing it. Sure I spent money to go hang out with my friends but I did it all the time. I went to movies 2,3 sometimes 4 times a week. Spending money had become my hobby; the activity I did after working all day for fun. I didn’t see it that way at the time but now looking back this is exactly what I was doing. I’m still seeing the effects of this when I don’t get a chance to go out and spend money for days at a time I try to find an excuse to go out for a nicer lunch. No real thought put into it, even when the little voice inside my head says that I can’t really afford it I reason myself out of not spending money and go ahead and spend it.
Over the years that I’ve been working I’ve stumbled upon spending patterns and tried to change them. For example I like going out for lunch and I’d do it every day; when I ran out of money I’d simply go to a cheaper place. So I would start brining lunch but the pattern of spending money without thought and as a way to escape was already there and would be back before I knew it.
I don’t want to go into countless details of poor spending that I’ve done over the years that would just make me want to escape it all (like I’ve done for years on end). The next step is to sit down and figure out why I never pay attention to my spending and see what patterns exist there; I already know about some of the patterns in how I spend money now its time to figure out the why. Tomorrow I’ll try to elaborate on the why’s behind spending as a form of escapism.
[tags]money, spending, escapism[/tags]