“You are what you buy.” Does that saying sound familiar? This is a catchy way to say that your spending affects your personal finance goals. For example, if you make purchases with your credit card, saving up for retirement or paying off your loans will be more challenging. Understanding how your lifestyle affects your finances can help you make better financial decisions in the future.
You might not think a lifestyle choice you make would have an affect on your financial goals, but it can. For example: if you buy a big house and then need to pay for the cleaning service that comes with it or all of those electricity bills because it’s so much bigger, it’s going to drain your pockets pretty quickly. It’s essential to know the differences between what you should spend your money on and what you shouldn’t.
Another big purchase many people make are cars. If you must buy one, start with a used car as they’re cheaper. You can visit luxurious yet affordable dealers like this Bentley Dealer to buy a used car that will be easy on your pocket but functional.
Short Term Overspending
You might look at your bank statement and notice that you’ve spent too much on eating out, clothes or other things. This is fine as long as it’s not a frequent thing. For example, if this happens once in a while because of an event, you have to attend – totally okay. However, if the scenario above becomes a daily routine, it might be time for you to rethink your budget. Additionally, think about your daily habits. Do you have more money left over at the end of the month, or are you broke? If it’s later, then maybe it’s time to make some changes.
People who pay for streaming services like Netflix and Hulu Plus spend roughly $155 a month on average. They also tend to be more likely to pay for cable television, which can push up this number even higher. If you’re looking to save money or stick with your budget, try cutting down how many different streaming sites and apps you have.
Reduce the number of subscriptions you pay for each month (Netflix, Hulu Plus). Cancel cable television and switch to antennas or over-the-air broadcasts. Cut out meals outside of your home by preparing breakfast and lunch at home using groceries bought in bulk and on sale.
Getting Into Unreasonable Debts
Your lifestyle can have a drastic effect on your personal finance goals. For example, if you get into unreasonable debts (credit card, gambling) due to overspending, then this could be the main reason why you fail in saving money or not being able to reach financial independence fast enough. This is because when debt goes up and savings go down, you are not on the right track to financial freedom.
Getting into excessive debts can make it harder to budget and stick to your goals. You mustn’t spend more than you can afford on things because your future goals will become harder to achieve when you get into debt.
Don’t let your personal finance goals slip away. Make sure you work on them every day. Don’t forget to budget, stay motivated and make smart decisions with your money. You can do it!