A recent study claims the average American plans on spending $992 over the holidays, and of those that will borrow money, they are expecting to put $1,054 on credit. Any time that you are unable to pay off your credit card balance each month, it is likely that may be spending beyond your means.
While some people are naturally frugal, many of the rest of us:
- Don’t consider budgeting until all our credit cards are maxed out
- Don’t consider starting a car reserve until our car dies there is no way to get to work
- Don’t start set aside money for medical issues until we can’t afford a treatment
- Don’t open and add to retirement accounts until we see our relatives struggle in retirement
- Don’t start saving money until we have plans for a home or wedding
- Don’t contribute to an annual gift reserve until we’re still paying for last year’s gifts and are buying new ones on credit
- Don’t make “paying yourself first” a permanent part of our financial planning until you, or someone close to you, loses their job for an extended period of time
Basically, we know we should budget and save. However, we do not have enough motivation to actually pay attention and do it until we take a hit on the chin so hard that we don’t want that to happen ever again. The better path is to read enough and learn enough from others’ financial mistakes and advice. Then move toward the sustainable living-below-your-means lifestyle on our own, without a calamity forcing us to re-evaluate our financial habits. It is my best advice that you do not wait for that calamity, because it can take years to dig out of a financial hole that you do not even realize that you are in.