It has been observed by the experts, based on various studies that many ,may be most of the activities which we normally perform daily don’t add any value to our lives/ careers. Some experts have even claimed that 90 percent of our activities are Non- Value adding activities. This claim may appear to be laughable to most individuals, BUT, if we write down all the activities which we perform on a normal day, we would observe that most of them do not improve or add any value to our life. The same is true about our money spending habits. If we jot-down our daily expenses, the fact will be revealing. And if we add all such non value adding expenses over a month or a year, it may run into hundreds of dollars. This is true not about the actual impoverished people living on the street, or barely- able-to-put-food-on-the-table people, but a lot of people with middle level income group, who also waste a lot of money.
Where Your Money Goes : –
At any income level, people who have small incomes, people who have six- figure or seven figure incomes, fall into one of the following Three categories
— People who spend more than what they earn ( accumulating debt)
— People who spend all what they earn (saving nothing)
— People who save 2,5,10 or even 20 percent(or more)
The spending habits don’t depend on the educational level of the individual. If one has a better education, he would be better with money – this is really not true. Lots of people, who are wasting money- may be on expensive mobiles, branded clothes or shoes, newest iphones or other expensive habits have a college degree , some even have a Master’s. While some of these people do spend money in Wise ways, whereas others spend in ways that seem Unwise. Wise means “in a way that will increase your wealth” and Unwise means “ in ways that will decrease wealth or that can be dangerous”. Some of the things people waste their money on,are like:-
- Cigarettes
- Lottery Tickets
- Expensive clothes/ shoes/ sneakers
- Manicures/ pedicures/ expensive hairdos
- The latest entertainment technology
- The highest price cable TV packages
- Casinos
- Eating out frequently, or other similar expenses.
These are some of the habits which really is a waste of money and Makes you Poor and you start living on debt/ loan and financial stress.
Examining Overspending : –
Many individuals earn just enough to make ends meet; some simply spend more than they make. The result of such spending habits, as mentioned above, is of course, an accumulation of debt. In the American market, you are referred as “ Consumer” and not as a person, a citizen or a human being. Some of these overspending habits may be due to the following reasons : –
–-Having Access To Credit : Thanks to the innovations like ATMs, credit cards, PayPal and so on, your money is always available, 24/7. Credit is most perilous when you make consumption purchases, you can’t afford in the first place. Consumer debt is nothing but the misfortune of getting in over your head, racking up high interest charges and thus delaying your progress towards your financial and personal goals.
— Misusing Credit Cards : – If you pay your bill in Full every month, credit cards offer a convenient way to buy things, but if you carry your debt over from month to month at high interest rates, credit cards encourage you to live beyond your means.
— Taking Out Car Loans : – Purchasing a car on loan may appear very tempting, but you are driving/ pushing yourself into a debt trap. Auto loans are easy for just anyone to get, but very difficult to repay. The dealerwants you to think in terms of monthly payments, which may sound cheap, but you’re going to repay it forever- and you just bought a car that cost a huge chunk of your monthly take-home income.
–– Spending To Feel GOOD : – Just as people can become addicted to alcohol, tobacco, television and the internet, some people also become addicted to Overspending like going to a fancy restaurant, just to feel Good. And the more you spend on such outings, the less you save and the longer you’ll be stuck working under stress, obligations and demands.
— Bending To Outside Influences : – Living for today has its virtues. Tomorrow may not come. But odds are good that it will. Some people just want to see the latest movie, even at an exorbitant price; wear the latest designer clothes, get newest smartphone, as they don’t want to feel left out or behind the times- although they may not be in a position to purchase them in cash or comfortably.
Financial Literacy : –
In recent years, various studies have indicated that Americans are by and large financially illiterate. Many individuals do indeed have significant gaps in their personal financial knowledge. Unfortunately, most Americans don’t know how to manage their personal finances because they were never taught how to do so. Now as a senior citizen or professional who are in the advanced age or who have already retired, have a responsibility to discuss money with their younger ones. Make them financial literate as most high schools and colleges lack courses that teach this vital, life-long needed skill. As parents, we must inform them important finance concepts, otherwise, they may learn the hard way – by making lots of costly mistakes. In addition,to the enormous financial costs, increased stress and anxiety go hand in hand with not mastering your money
CONCLUSION : –
This topic is very pertinent for the individuals who are nearing retirement or who have already retired. They have to inculcate good financial habits in their children, in their family members so that they understand the importance of financial planning and budgeting. They should spend their money wisely and set an example to their children. The spending habits should be driven by YOUR desires and plans and not those of others. If you have not set any goals yet, you may not know how much you should be saving. It is a fact that despite relatively high income compared with the rest of the world, some Americans have a hard time saving a good amount of their income, because they spend too much- sometimes far more than necessary..