People do some silly things with money. Maybe you get caught up in a moment and buy something pricey that you just don’t need – or have any use for. Perhaps you cut back on your 401(k) contribution in favor of having a bit more spending money each month.
We all have spending habits that we don’t think about; even ones that would make us roll our eyes at ourselves if we actually considered what we’re doing. Here’s one that boggles the mind – but we’ve all done it at one time: Blowing a bundle impulsively when we have trouble saving for a big-ticket item.
For example, you may tell yourself there’s just no room in your personal budget to save for that plane ticket home to visit family. You’ll just put the cost on your credit card and pay it off over several months, you tell yourself. The next day, you go to the local wholesale club store and drop $250 on groceries.
We’ll bet you could find a way to trim at least $25 off that bill by eliminating things you don’t really need. That cash could then go into your savings and in a few months you would have the money to pay off that ticket immediately, instead of paying credit card interest on it.
Here’s another one: You balk at spending $400 on new tires for your car and decide to put off this necessary expense for another month. For the next 30 days, you stop in at the coffee shop every morning and pick up your daily $8 extra-large, super-special cup of coffee. If you had made coffee at home every day and pocketed that $8, by the end of the month you would have nearly enough to pay for those tires.
When we’re faced with a large one-time payout, we cringe at the cost because it’s easy to see the magnitude of the expense. Yet when we spend in smaller increments, like that cup of coffee, our brain can trick us into thinking we’re not really spending that much. Looking at the bigger picture, we can see that those costs add up.
What silly spending habits do you have? And how do you work to build better money habits?