LOUISE FAIRSAVE: Undisciplined spending
WITHOUT AN OVERALL personal strategy to contain spending within one’s earning means, a person will be on the road to financial ruin.
In essence, undisciplined spending will result in the offender being saddled with debt mainly as a result of personal acts of commission or omission; they actively jump into the pool of debt, sometimes unwittingly.
A basic example is the results of undisciplined spending arising from an overpowering addiction. Such addiction does not only apply to substance abuse; one can be addicted to destructive financial lifestyles. Let us call this type of addiction financial lifestyle imbalance.
The most familiar example of this imbalance is the addiction to spending consistently beyond one’s means. This may be a result of trying to keep up with the Joneses next door.
It is also possible that being disposed to overconsumption way beyond one’s means may be psychologically driven, very much like substance abuse addiction.
Some people feed their self-esteem on their ability to acquire material goods and on their capacity to explore a wide range of activities well beyond their means.
Financial lifestyle imbalance may also be manifested in specific areas. For example, some people may overspend on grooming, on telephone calls, on their vehicle or on their home.
Do you know anyone who is on minimum wage yet who expends more than a week’s wage at the hairdresser each month? Is there anyone you know who expends a similarly disproportionate amount of earnings on mobile phone services?
What about the first-time owner of a vehicle who goes overboard in spending on new flashy wheels and gadgetry for the new possession?
Undisciplined use of time, either through procrastination or through devoting excessive time to one particular activity, can also contribute to major financial setbacks.
In order to be able to spend more, one needs to earn more. It is usually possible to spend more time earning, adding to one’s otherwise normal earnings. The choice not to work more where it is possible to earn more limits the scope of one’s wise spending.
Yet, it also is acknowledged that it is important to maintain a positive work/life balance. So, an alternative to working more is working smarter.
For example, a worker may undertake additional education, training and/or development in order to provide more value on the job; typically, this will mean a higher rate of pay.
Procrastination can be an obvious waste of time that can be spent earning or improving one’s application, skill and/or knowledge on the job. The procrastinator is likely to waste opportunities to increase earnings.
Increasing earnings eases the pressure to spend within lesser means. The overall observance of disciplined spending comes right down to the simple admonition to live within one’s means.
Wise spending is disciplined spending.
• Louise Fairsave is a personal financial management adviser, providing practical advice on money and estate matters. Her advice is general in nature; readers should seek advice about their specific circumstances. Email [email protected]
This column is sponsored by the Barbados Workers’ Union Co-op Credit Union Ltd.