Things You'll Need:
- Will-Power
- Savings Account
- A desire to understand the difference between your wants and your needs.
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Step 1
Your wants are disparagingly higher than your needs. In many nations the citizens spend the day trying to fulfill basic human needs; food, water, and shelter. The average American does not concern themselves with daily basic needs but is rather driven by wants; cars, televisions, clothes, computer gadgets, and tasty food.
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Step 2
You have too many credit cards. One or two credit cards that are paid off monthly can be a great way to build good credit. But with too many credit cards it can leave us with access to large amounts of money and loans that can not be repaid.
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Step 3
You don’t look at the total cost but rather at the monthly payment. A good example of this point is when you purchase a car. When you are at a car lot and looking at all the shiny new cars they all look like such great deals. The car salesman starts to explain that this beauty of a car is only $350 a month. At the time it seems financially doable. Unfortunately, what you fail to take into consideration is the interest you will pay on loan and the length of time we will have to carry the loan.
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Step 4
You spend because you’re unhappy. Sometimes you buy things hoping that those things will make you feel better. You are sad and had a bad day at work. A co-worker suggests that you go to the mall and buy a new sweater. “Shopping always makes me feel better. I think a new sweater is just what you need!” Most likely a new sweater is not going to make you feel better or resolve the reasons why you are not happy.
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Step 5
You shop impulsively without budgeting or comparing prices. You see something you like and you have to have it right then and there. You don’t concern yourself with budgeting for the item, you just buy it. You also don’t take time to do a price comparison or research the effectiveness of the product. You are then left with a product that you spent too much for and might or might not meet your needs.
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Step 6
You feel the need to give your children everything. We live in a society were we are constantly bombarded with new products, toys, and must have clothing. Not a day goes by that our children are not asking for something. Because their peers have new things we feel an overwhelming need to give our children what their friends have.
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Step 7
You try to keep up-to-date on the latest technology. While it is good to keep current on trends in the computer industry trying to have the newest of everything can be very costly. Normally when new items come on the market they are at their most costly. If you wait four to six months the price falls tremendously.
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Step 8
You spend to buy friends, family, and love. You think that the only thing we have to offer is our wealth.
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Step 9
You spend to keep up with Jones. You feel the need to compete with other neighbors and friends. Competing with others can be a very dangerous game because behind closed doors you have no idea of their financial well being.
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Step 10
You spend because you lack financial goals. Instead of setting up financial goals and putting money aside for retirement, kid’s college, and investments you think of all of your extra money as disposable money to be spent on your wants and desires.
