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Discipline with Money

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The key to money management is discipline—and by that I mean self-discipline. Self-discipline means you can control yourself without supervision or coercion from someone else.  Are you an adult about money?

Here’s how adults behave:

Adults accept the reality of their income and adjust their “wants” and even to some extent their “needs” accordingly.  An example of this would be that a family of limited means who is shopping for a car may look at used cars and request to see only those models that fall below a certain maximum figure.  A better-off, but not rich, family might shop for a mid-priced car but would not even window shop at a Lexus dealership.

Adults prioritize their spending.  The most essential expenses are taken care of before any money is spent for luxuries.  The essential expenses that spring immediately to mind are housing, utilities, food, and transportation. These expenses are all adjustable according to the money your family earns. Your housing can range from a modest rental apartment to a million dollar mansion.  The problem too many people have is that they want a new four-bedroom home with three bathrooms when their income is only adequate for a remodeled three bedroom in a thirty-year-old housing development.

Adults delay gratification.  Of course everyone wants to have one of those gorgeous, huge flat screen television sets in their living room; but before you buy a movie-size screen, how about making do with the old television until you have money in the bank for an emergency fund and have also saved up to pay cash for the new television. Trust me on this; you will enjoy that television much more if you are not scrambling around to pay the credit card bill with its extra high interest rate every month.  I believe most credit card debt is incurred, not out of need, but because people don’t want to delay gratification on the items they want; but buying those things by credit card raises the expense astronomically.  When you buy for cash, you pay what the item costs. When you buy on a credit card, the interest raises the price.  If you stopped to figure out what such purchases actually end up costing, you would probably be willing to wait to pay cash for what you buy.

Once you come to grips with the reality of your income, you can either figure out how to live within it or how to make more money.  The first option is usually easier.

In my financial life, I often prefer to remain “artificially poor” even when there is money available.  For years, every time my husband or I got a raise, we had a discussion about what the extra income would be used for.  Sometimes a little would go into the general spending pool; but always some of it or all of it would be used to augment our savings.  We just “ignored” the raise and grew a little bit more financially stable.

Speaking of having a discussion about money—that’s a key element to proper money management.  Even if you live by yourself, you may have to give yourself a “talking to.”  Sit down with a notebook at least once a month to make your plans.  Partners do this together.

The planning in that monthly meeting allows you to decide on short-term goals and long term goals.  A look at where the money went in the month before can enable you to determine better ways to allocate your funds. If the cupboard is always empty, maybe you need to plan how to get the most for your grocery money or what other areas, such as eating out, that you can trim from your budget to increase the amount you can spend for groceries.

To sum things up, if you’re an adult, you make money responsibly, plan a budget responsibly, spend responsibly and prosper. Children on the other hand spend all the money you give them the same day they get it.  It can be fun to act like a child with money but it’s rewarding to act like an adult.

 Ruth Elizabeth

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