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Why Am I Broke?
March 6, 2016
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I look in my pocket book. There a five dollar bill and some change. I look in my “secret stash” drawer, it contains thirty-two one dollar bills. This is the cash reserve to meet the demands of my kids as they nickel and dime me throughout the week. I dole it out one dollar at a time so I can give the precisely how much they need because I know if I give them any extra I will never see the change. I consult the balance in my checkbook. It’s eighteen dollars which could be off, roughly, by a couple of bucks because I am lousy at balancing my checkbook.

It’s four more days until payday. Why am I so broke all of the time? I usually laugh it off and blame it on my children, but, truthfully, I think I have to accept responsibility for my fiscal irresponsibility. I get lazy and lax because in the back of my mind there are words and phrases that creep about which allow me to spend frivolously without a conscience. Words like: “My husband has a pension;” or, “That darling husband of mine makes a deposit to the savings account twice a month;” or, “No need to worry, my man’s got a 401K.” Yes, I am leaving it all up to my husband to provide for our retirement as I happily spend every penny in my pocket. Is that fair? Is that wise? Can I change if I examine myself honestly and discover it is unfair and unwise?

The first step toward financial security is a steady paycheck. Although I have a steady paycheck, it is generally a rather small paycheck. I work from home and only during the hours I have the place to myself and I am undistracted. With three kids and a husband, that means part-time hours. But, still, it is a steady income that I can create a budget with. A budget means I am then managing my money rather than allowing it to indiscriminately trickle out as fast as it trickles in.

Since no one can work forever, I have to assume that at some point in time, this steady paycheck will cease. So, a paycheck is not financial security. It is a step toward financial security. A portion of my wages should be set aside for future financial security. The question then remains… With my meagre earnings, do I have enough to work with to create wealth in the finite time I have to work with?

There are strategies everyone can follow to make the most of a paycheck, enabling them to have even a tiny amount to set aside for the future. Consistent accumulation of even small amounts can eventually lead to a large retirement fund. With the help of savings accounts, secure investments and other types of interest bearing accounts, money begins to grow of its own accord.

The biggest mistake most people make is that they do not create a budget on paper so they can see with their own eyes the reality of their financial situation. By living according to the rule that if the money is there then just spend it, a person never lives below their means. They are living according to their means which “means” they spend every available dime and save nothing. That is me. That can change. Even if I start with just ten dollars a month, I can begin to save.

The next critical lifestyle move to enabling a person of small means to save a little bit that eventually grows into a lot is to live as debt free as possible. That means no credit cards, no car financing, no buying a new living room set “on time”, etc., etc., etc. For my husband and I we even went so far as to choose not to buy a home. When we actually crunched the numbers, we saw that home ownership was a money pit as well as a physical trap, obligating us to live in one geographical location for many years. Who can predict the future? No one. What home does not require annual taxes be paid? None. What home never requires a paint job, regular lawn maintenance, appliance replacement and cosmetic and structural repair? None. How many mortgages are not accompanied with homeowners’ insurance premiums? None. So, we rent. Renting has simplified our lives and saved us enormous amounts of money in the long term. We also enjoy the freedom of being able to relocate hassle free and without a potential financial crisis.

The real key is consistency and resisting the “dip” temptation. Make a budget and stick with it. Do not “dip” into the money set aside for the future. Twenty, thirty or forty years later, I will bask in the glory of what I have done!

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Claire

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