Episode 94: Declare Independence from Bad Money Habits

Do you suffer from bad habits with your money? Start some new, excellent habits and declare your independence with your money!


Show transcript:

Welcome to the SimpleMoney Podcast, where we make personal finance less intimidating. I’m Dawn Starks, a financial planner and lover of the simple life. I’m here to talk about money and simplicity. Let’s dive in. This is Episode 94: Declare Independence from Bad Money Habits. How was your 4th of July? Did you have lots of fun, and shoot off fireworks, and eat lots of junk food and just stuff that’s not very healthy for you?

We had a pretty quiet 4th of July here. We didn’t do a whole lot. And fortunately our neighbors didn’t set off a lot of fireworks like they have in the past, which is nice because the chickens and the dog and the cat don’t seem to like the fireworks very much. Last week, as a result of the holiday week, I wrote a post about declaring independence from bad money habits.

And so I thought I would share that with you here today. So it was a short post, so this will probably be a short podcast episode. But I talked a little bit about some bad money habits that people have and what I offered up were four good habits that you can try to take on instead of the bad habits, in order to declare independence from those bad money habits.

So let’s talk about some. So here are four excellent habits that you can embrace to try to get rid of some of those bad money habits that people tend to have. So the first one is to stop buying stupid stuff. So there’s another way of saying that, that I won’t say here, but you know, we all do this from time to time.

You just see something that catches your fancy and you might be feeling sorry for yourself, you had a bad day at work, you might just feel like you just need a little pick me up and you just want to buy that thing. That shiny item, you know, the little geegaw or whatever it is, and you just decide that you just have to have it.

And of course, if you have children, then this is multiplied exponentially because children, of course, are the grandmasters at this. They see stuff all the time out and about that they want to buy, that they want to have. And so having children makes this problem many times worse and more difficult to deal with. But the key here is to try to introduce some mindfulness in your spending, and also then of course,

teaching these skills to your kids. So we probably will never stop ourselves completely from buying something impulsively, just stupid stuff that later we’re going to regret that we bought it, or it’s just going to end up, you know, in the closet or in the drawer, and then ultimately getting donated. And we’re going to feel bad about it the whole time,

because we wasted our money on something. But we can reduce it. So we can reduce it by trying to get into a new habit. If you can stop yourself before buying something that you didn’t actually set out to buy on that trip and just stop yourself and say, “Do I really need this item?” And just try to put a little pause there to figure out, “Is this something I really need?

And it was really something that was kind of on my list, but I just forgot to put it on today’s list. And so it is actually something that we need. Some food item for the kitchen, for something we’re going to make.” Or maybe it’s something that you actually need, you know, in your wardrobe or whatever. And so it’s just something that,

you know, you definitely do need. And then you can say, “Yes, I actually do need this item.” And then you can put it in your cart or in your basket and buy it and then not worry about it. But probably, more often than not, what will happen is you’ll stop yourself and ask, “Do I really need this?” And you’ll realize that,

“No, this is an impulse buy. This is not something I need. It’s not on any list. It’s not something that I would ordinarily buy, or maybe it is something that I ordinarily buy that I shouldn’t be buying.” And so you catch yourself. So by just introducing that little pause there, by asking yourself, “Do I really need this item?”

Then that can give you that little moment of mindfulness just to decide, you know, “Do I really want to spend my hard-earned money on this item? Or should I just admire it, set it back on the shelf and move on with my shopping trip,” or, you know, move on with your life. So it’s really just that little moment there. And so when your kids do this, you can do the same. They can come up to you and say, “Mom, Mom, I want to have this.” And you can say, “Do you really need that?” And then they’ll of course say, “Yes, of course I need this!” And then you’ll say, “What do you really need it for?”

And then they may tell you, or come up with some reason that they really need to have it. But you can probe a little deeper and say, “Well, you know, but won’t that just end up in your closet, or on the floor of your room, just like this other thing, that’s just like it?

Won’t it end up there, and you just won’t play with it anymore?” And of course they’ll plead and cajole and try to get you to buy it anyway. And then of course, the thing I use, the kind of the ultimate tool with kids is that then I would end up by saying, “Are you going to spend YOUR MONEY on it?”

And that almost always, I mean, that’s probably like 95% success rate for me with my daughter, is that if I ultimately say, “Are you going to buy it with your money?” Then she rethinks, really quickly, that she doesn’t really actually need this item after all. And so she usually will put it right back! Or, you know,

later in a shopping trip, she might hold fast to that item, and then later on, find something else that is something she has stated previously that she wanted. And so then I’ll tell her, “Well, you can’t get both those things, so you have to pick one.” And so usually the first kind of impulse thing that she picked up is the one that goes.

So, you know, you just have to kind of figure out what makes your kids tick and what’s going to make them start to see and understand this concept. And so for me, in our family, it has worked out well for us to have our daughter use her own money when she wants to buy

what we would consider stupid stuff. So of course this is predicated on your child having some sort of an allowance or, you know, access to some money of their own to be able to spend. And I really highly recommend that, that even kids as young as two or three, as soon as they can understand what money does – that

you have to exchange money for an item – you can start giving them a little bit of control over having a few quarters or a dollar or something that they can make decisions about what they want to spend their money on. And we should, as parents, let them screw it up sometimes, we should let them buy stupid stuff that then later they regret, and then

that’s the time when you don’t say, “See, I told you so,” instead you say, “Well, remember we talked about that at the store, and you determined that you really needed it. And so you bought it and now you regret it. And so maybe that’ll help you in the future to think through, you know, ‘What’s going to happen with this thing after I get it home and I play with it for five minutes?'”

So those are, you know, just things that you can talk with your kids about. But ultimately my objective today is just to bring attention, or to help you bring awareness, to your life about the stupid stuff that you buy and to find a way to stop doing that. And so inserting that little moment, that little break is the key to getting that under control.

So the second good money habit that you can try to implement to get away from those bad habits is to start a new savings or investment plan, or maybe increase the one that you already have. You know, this is a good time of year, we’re kind of midway through the year, it’s a nice time to kind of evaluate where things are,

where are you on your money goals for the year? And if you feel like, “Hey, well, you know, we’ve been rolling along okay here, so this is a good opportunity for me to increase my savings, or increase my investing.” So whatever you’re doing, just ratchet it up a notch. And if you don’t have any savings or investments going,

then this is the time to implement it, because what you’re probably doing is wasting your discretionary money. You’re spending it on stupid stuff and otherwise. And so by taking the bull by the horns and paying yourself first and actually having this money going to work for you instead of just getting, you know, wasted away right out of your checkbook and out of your savings account,

then that’s going to put you in better stead later on. So that’s a good habit to employ, either increase the amount that you’re saving or investing now, or get started on a new program if you haven’t got one underway right now. The third good habit that you can think about in this time of declaring our independence would be to get serious about paying off your debt.

So if you have credit card debt that you carry – so when I’m talking about debt, I’m talking about the balance that you carry from month to month, that you don’t pay off. If you use credit cards and you pay them off every month, that’s not really a debt, because you’re paying it off and you’re using credit cards correctly. So, but if you carry up a balance month to month,

that’s credit card debt, and if you have credit card debt, you need to fix that. So first and foremost, you need to figure out what are you charging on there every month? Because there’s a difference between charging your monthly necessities – so if you’re charging groceries, if you’re charging gas for your car, if you’re charging those regular reoccurring expenses that fuel

your day-to-day, week-to-week, month-to-month living in your household, that’s a problem because that means you have inadequate income and you’re using debt in order to finance your basic expenses. On the other hand, if you are using your card for the extras – so maybe you can cover all of your bills every month, but you are using a credit card in order to do a little bit more,

to have a little bit more in your life, in the way of extras or luxury items, or a little bit extra discretionary money, you know, that sort of thing – so that’s bad too, because you’re accumulating debt in order to live a lifestyle that you can’t afford. But the first scenario where you’re actually using your credit and you’re racking up, or carrying a balance, for your month-to-month expenses,

that’s problematic because that’s more of a systemic problem, meaning that you don’t have adequate income to cover your expenses, and you’re making up for it with financing it on debt. And that is going to compound itself over time. It’s not going to get any better unless you do something about it, which means get more income or radically cut your expenses to get that debt paid off and get

your expenses reined-in. So if it’s just the second, if you’re using the credit cards for the extras, for the, you know, the niceties of life, that you can curb also, and that, you know, you do it the same way, you would either earn some more money to afford more of those things you want to do,

or just cut back on some expenses in order to get that debt paid off. So you need to be using those credit cards and paying them off every month. Use them as a convenience, not as debt or financing. So you shouldn’t be using them to finance your life. So once you figure out what are you using it for,

if you can stop using that card and then only work on paying it off, so not use that card anymore, and then work on paying off the debt that you have. So first you have to stop that bleeding. So, and I’ve got several posts and I’ve done several podcast episodes before on how to pay off your debt, I’m not going to go through all that again today,

I just want to remind you that this is a time when you can look at what your habits are with your credit cards and say, “Am I carrying a balance every month? Why am I carrying a balance every month? Let’s get to the bottom of it and figure out what is the problem here?” And then once you get to the bottom of it,

then you can figure out what your game plan needs to be to get it paid off. So after you get those monthly income, or I’m sorry, monthly expenses stabilized, then you can start tackling that accumulated credit card debt and get it paid off. So the fourth thing that you can do, the fourth good habit or excellent habit that you can employ,

or just sort of double down on if you’re doing it already, in order to declare your independence from bad money habits is to track your expenses. So I call this one the mother of all financial exercises. So if you are struggling in any way in your financial life, the very first and best thing that you can do is to track your expenses.

And I mean EVERYTHING. And I mean to the PENNY. And preferably in WRITING, okay? You can certainly use a spreadsheet if you want to, or some sort of budget program or something that keeps track of things, but writing down every single day, by hand, what you’re spending your money on is incredibly eye-opening. So you could sort of set aside or just do duplicate work if you like to use a spreadsheet,

or if you like to use an app, but spend a month writing down, by hand, every single day, say, “What did we spend money on today? Well, we went to the grocery store after work, and so we spent X. And I had to stop for gas and put gas in my car. So I spent Y on that.” And so on and so on.

So, every penny you spend, you write down. So you can keep your receipts at the end of the day, you can log them and you can tally it up and start looking at what you’re spending your money on. The benefit of doing it by hand is that it forces you to actually pay attention to each individual item, as opposed to just going by your automated app,

that might be pulling those expenses, you might be using a credit card or debit card, and it might just be pulling those things right into the app and categorizing them nicely for you, which is great for speed, but it’s not great for awareness because it’s just happening in the background. And then you kind of want to look at it and you think you’re looking at it closely,

but you’re kind of just giving it a cursory glance and you’re not really paying close attention to it. So if you are struggling in any way in your finances, stop for a minute, and it doesn’t matter if it’s the first of the month or the 12th of the month or the 24th of the month, start that day, get a piece of paper out,

track every single penny that you spend every single day. And trust me, I promise that you will find out shocking things about your life! So even if you’re good with your money – and I can tell you this from personal experience, because I’m pretty good with my money – even if you’re good with your money,

you will find out shocking things about your spending by doing this. So I cannot, I cannot emphasize enough how important it is to do this. So some people track their spending every single day, all the time. And that’s great. I don’t do that because I find it incredibly tedious, and it’s also horrifying often enough that I don’t like to do it.

But whenever I want to kind of get some more awareness about what’s going on, or certainly in the past, whenever there’s been, if we’ve had financial difficulties, this is the first thing I pull up and I start doing this. Nowadays, we don’t tend to – fortunately, knock on wood – we don’t, fortunately, tend to have any money problems now, but we do easily fall into mindless spending.

So getting back to tracking makes it become mindful again. So those are the four things, the four excellent money habits, that you can embrace today to get yourself, steer yourself away from those bad money habits. So that’s what the point of today is, in honor of Independence Day, we’re going to declare independence from our bad money habits, and we’re going to start implementing excellent money habits.

Thanks for listening. If you enjoy the SimpleMoney Podcast, be sure to subscribe on your favorite podcast player. We’d love it if you would leave us feedback and a review. And don’t forget to check out my blog at simplemoneypro.com. There you’ll find dozens of posts about financial issues that matter to you, as well as thought-provoking pieces about simplifying your life. Bye for now.


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