Wednesday, April 10, 2013

Money Matters: Sew Up that Hole in your Pocket

Whoever said money doesn’t buy happiness obviously already had enough of it.  Because while having lots of money isn’t the only ingredient in a happy life, having sufficient funds to take care of your needs is a major part of a happy lifestyle.  There are a million things I could say about how you should handle your money, and all of them have been said before.  So I’m going to focus on just one skill that people who handle money effectively master, whether they have a lot of money, or a little.

You have to learn not to spend money just because you have it. 

This is not easy.  The world is full of things to spend your money on, and our advertising-saturated culture conspires to convince you to spend it now.  There is no end of things you can do with your money.  (There is not even an end to all the good and worthy things you can do with it.)  Having money means having the power of buying choice, and spending it means making choices.  So as soon as you have money, you want to spend it on many shiny things.  This is natural.

But here’s the thing: financially speaking, bad things happen to everyone.  Cars break down.  Unexpected bills come due.  People get sick.  And when you’ve budgeted yourself out to the penny (or worse, spent money you don’t have), there’s nothing left over to handle these things when they happen.  I’ve watched people I love bemoan their “bad luck” when hard things happen that cost money, because clearly it’s unlucky that these expenses came when they couldn’t afford them.  And sometimes, no matter how prepared you are, that happens.

But if you’re not in the habit of saving money, it’ll happen all the time.  And that’s not bad luck.  It’s poor planning.  (Sometimes it’s also other problems, like under-employment or lack of education, or poverty or other such things, but I promised I was only going to talk about the one thing, and I’m sticking to it.)

So do yourself a favor: spend less money than you have.  Set some aside for expenses that pop up.  If you have to, put it in an envelope and pretend it doesn’t exist.  If you can manage it, leave it in a bank account and let it earn interest.  Count it, and keep it for times when bad things happen.  And (here’s the best part!) sometimes that’ll mean that you can take advantage of happy opportunities, too, because fun things will pop up suddenly (not at the moment you have money), and you’ll have savings for those, too. 

It’s been said that people whose wants are less than their means are rich and people whose wants exceed their means are poor.  This is, of course, a gross oversimplification, which ignores that there are many people in this world whose basic needs go unmet.  But assuming you have enough money for your basic needs (and I don’t mean your smart phone or your tablet or your new car, either), then it’s possible to scale back to less than you make, however much or little that might be.  Do it.  Take some of your money and save it like it doesn’t exist. 

You’ll thank yourself for it later.

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