One of my close friends has a girlfriend who can’t afford a down-payment on a car despite having a full-time job. Each day my friend drives her to and from work. Her workplace is in the opposite direction of his and they don’t work similar hours, so a significant part of his day is spent driving.
Recently my friend told me this is both time-consuming and exhausting week in and week out. They both wish she could find the money to get her own car because it would make their lives significantly easier.
I asked my friend if she has a plan in place to save for the new car.
“The money just isn’t there right now” he explained to me.
I found this a little odd and didn’t pursue the conversation further because it would have led to me saying “Actually I do think the money might be there.”
I know his girlfriend has rent, utilities, groceries, student loans, and phone bills to pay each month and many of those expenses can’t be avoided. But I have also been around her enough to watch her spend mind-boggling amounts of money on new clothes, expensive lattes, $12 movie tickets, high-end alcohol, and going out with her friends most weekends. Her impressive shoe collection is even on prominent display in her living room.
This financial situation I’m describing is not unique to my friend’s girlfriend. Too often people spend hard-earned money on things that don’t matter and forfeit the ability to save for things that do matter.
More specifically, many people have a tendency to blow money on recurring expenses like bar-hopping on weekends, buying lunch at work, and attending expensive concerts, movies, and shows.
To be clear, there is nothing wrong with spending money on any of these things as long as it doesn’t impeded your ability to have money for the important things in life.
I have seen countless examples of this behavior. One of my coworkers recently turned 30 and was complaining about him and his wife being unable to afford a down payment on their dream home. They’re at a point where they desperately want to move out of their apartment and get a home to start a family.
From the outside looking in, I can see clear as day why he doesn’t have the money. Between watching him buy lunch at work each day, buy season box-seat tickets to the local college basketball team, and go out most weekends, I can run some quick back of the napkin calculations and easily see how much unnecessary money he’s spending.
I have another coworker who is in his late 50’s and jokes that he’ll never be able to retire because he “sucks with money”. Yet he recently bought a new Dodge Charger.
I often feel as if people don’t fully comprehend the fact that this is our only shot at life. This is it. No re-do’s. There are some things that are wildly important in life: spending time with family, having the freedom to do work you want, the time to make an impact on others, for self-improvement and growth, for travel and exploration. But so many people don’t have this freedom and never will because mindless spending on unimportant things is stealing their ability to be financially free.
Part of the problem is the obsession with short-term gratification in our society. Many
people live for the weekends. They live for the next new car, the next night out on the town, the next piece of clothing, the next shopping spree.
Somehow people find money for the short-term expenses but can never come up with a significant chunk of cash to put a down-payment on a home, buy a car they truly need, or switch to a less time-consuming job to have more time to spend with family. These things matter. But it’s hard to tell based on the way people spend money.
If you never seem to have money for the important things you want in life, check your spending. Look at your credit card statements. Sit down and analyze where money is spilling out of your wallet on a regular basis. You might be surprised at how much you can save once you realize how much of your income is being wasted.
Prioritize saving for the things that matter in life, because this is it. It’s our only shot at life. Money is an insanely powerful tool we can use to craft our ideal life, but it also holds the ability to keep us trapped in poor financial habits, in stress and worry, in a place where we have no freedom to spend time and money on the important things.
You already know what the important things are in your life. You know what should take priority. Make sure your spending habits are aligned with your priorities.
Zach is the author behind Four Pillar Freedom, a blog that teaches you how to build wealth and gain freedom in life.
Zach's favorite free financial tool he's been using since 2015 to manage his net worth is Personal Capital. Each month he uses their free Investment Checkup tool and Retirement Planner to track his investments and ensure that he's on the fast track to financial freedom.
Although the bulk of his net worth is invested in index funds, his favorite place to invest in individual stocks is M1 Finance, a site that allows you to build a custom portfolio of stocks for free.
His favorite way to save money each month on his recurring bills is by using Trim, a free financial app that negotiates lower cable, internet, and phone bills with any provider on your behalf.
His favorite micro-investing app is Acorns, a free financial app that takes just 5 minutes to set up and allows you to invest your spare change in a diversified portfolio.
His favorite place to find new personal finance articles to read is Collecting Wisdom, a site that collects the best personal finance articles floating around the web on a daily basis.
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