I’ve come a long way from the financial situation I had when I first got out of college. I’ve been deep in debt, climbed my way out, back in debt again, and finally in a solid place financially now. While my knowledge and maturity in handling my finances has grown a lot since then, there are still times when I become a little too nonchalant when it comes to spending.
For instance, last year around the holidays I ended up spending more than I had planned to (which is the case every year, I think I should just increase my plan). The real problem though, is that I’ve carried over that spending habit into the new year. Lately I’ve been buying things here and there and dipping into a little of the money that I usually put away each month. In doing this I realized an important point about saving your money. When you don’t have a clear financial goal that you are working towards, it’s harder to save.
I was at a point where my wife and I had just went through a couple years of strict savings since we were planning on getting married and buying a house. Well, now that our savings plan worked so well and we’re both married and in a house, we haven’t really sat down to work out what our next financial goal is. Thus, we’ve been spending more than usual and not saving as much as we could be. We’ll have to come up with a clear plan now on what our next goal will be. Since we have our emergency savings already, we’ll probably come up with a plan to put extra money into our retirement plan and some into an investing plan.
So why is it so much harder to save without a clear goal in front of you? I think it basically boils down to our human nature of not doing something when there’s no direct consequences. Think back to when you were a kid, you knew that doing certain things was wrong, but if you never got in trouble for them you would do them anyway. Sure, later in life you might feel the consequences, but you don’t think of that at the time. So, when there’s no direct consequences, the motivation to do what’s “right” isn’t always there. Compare that example to adults and their finances. For my wife and I, if we didn’t save for the house and the wedding, we were jeopardizing a lot of planning (and money) that we’d already put into those things. Not to mention, if something fell through with the house, we’d have no place to live. Talk about a motivating factor! So, now that we’re “comfortable” in our financial situation, we’ve lost the hunger to save. The key is getting that hunger back, and keeping it for the long haul by continuously raising your goals after each one is met.
Whenever we set clear goals for ourself, it’s much easier to save money. When we set goals we set expectations for ourselves, and when those expectations aren’t met, it’s sort of like a failure for us. That feeling helps us to stay on track, and in the end, helps us to save our money. If you’re at a point in your life where your spending a little more than you want, set up a financial goal for yourself as well as incorporating your savings plan into your budget. I think you’ll be surprised at how much better you do holding on to your money.
