If I just had more money...
I have often heard from people struggling with money problems that things would be better if they just had more money.
"If I just had more money..."
- "... I could start a savings fund."
- "... I could pay off my credit cards."
- "... I could pay my bills on time."
- "... I could avoid bankruptcy."
- "... I could afford to put money away for retirement."
Let me start by saying that if you cannot pay for basic necessities, like food and housing, then more money will definitely make things better. But for the rest of us, I don't think we have a 'not-enough-money' problem.
There are numerous articles and documentaries about how a majority of NBA and NFL players go broke within a few years of retirement. There are similar stories about lottery winners who are now broke and how they are more likely to declare bankruptcy. Despite making or winning a lot, they still ended up with 'not-enough-money' problems. Millions of dollars did not solve their problems, it highlighted them. In the words of Notorious B.I.G. - mo' money, mo' problems.
What problems did they have? They made bad or risky investments, spent extravagantly, gave money generously to friends and family and did not save enough. Generally, it could be summed up as poor money management.
Managing your money is kinda like juggling. If you gave someone three balls and they couldn't juggle with three, what do you think would happen with ten balls? It wouldn't be pretty. It would be better to master juggling with three before adding any more balls. Similarly, if you cannot manage your spending and make sound financial decisions today, more money will not change that. It would be better to master your finances now before adding more into the mix.
If I've convinced you that more money will not solve your problems, what now? I'll leave you with two basic skills to practice:
- Practice not spending all your money
One of the hardest things about managing money relates to something called Parkinson's Law, which essentially says the demand for something always rises with the supply. In plain English - the more money you get, the more you end up spending. This happened to me the first decade of my working years. After years of working, my salary doubled, but sadly I still had no savings. It takes almost no effort to spend money and a lot of effort to save it. Savings doesn't happen accidentally, it must be intentional. It's ok to start small - it's about developing those savings muscles, more than the amount. Get used to having money set aside and not touching it.
- Reign in impulsive spending
Many of us have tried to make a budget, but it's really hard to stick with it day in and day out. It's usually not the rent or the utilities that makes us blow our budget - it's daily and weekly spending decisions we make, like eating out or shopping. One way to reign in impulsive spending is giving yourself a weekly cash allowance and leaving credit/debit cards at home. When it comes to shopping for things I don't need, I try to wait an extra month. If, after a month I still really want it, then I buy it. Often, after a month I won't really care about it anymore. This has helped me while not depriving myself the things I really wanted.
