How do you gamble with your financial future every single day? The answer is simple and I won’t make you read the whole article to find it. You don’t run the numbers!
People lie. Numbers don’t lie. Sometimes you have to stop relying on your gut and your emotions, and get tactical with your approach. Sometimes you just have to accept a harsh reality check. You can’t always just act on emotion.
All of this talk about life in your 20s is great. Today we’re going to throw the theory out and look at real numbers.
Let’s throw some numbers together now. Trust me, these numbers won’t lie to you.
Why bother cutting back?
Why should you even cut back on your spending? It’s so much fun to spend money and have whatever you want. I personally have been known to suck at saving money. I can’t help but blow money at times. I love to go out and have cool things. Despite writing about personal finance, I’ve managed to spend money like a fool.
So then why bother cutting back at all with your spending? Because the numbers don’t lie. When you run a few calculations to see how your money is being wasted, you’ll want to hit your head against the wall. I’m not saying that you have to be miserable and cut back on everything. I’m just suggesting that you cut back once in a while.
I was shocked by what happens with a few bucks. I put in $2 spent every single day, for 10 years, with a foregone interest rate of 2%. What were my results?
“If you spend $2.00 on an unnecessary product or service every day, over the course of 10 years you will end up spending $7,296.00. If you were to instead choose to invest the $2.00 every day rather than spend it on an unnecessary product or service, you could earn $773.36 in interest. This would bring the real price-tag of what you are spending your money on to $8,069.36. So the question you should ask yourself is this: Is what I am periodically spending my money on worth the $773.36 interest earnings that I am passing up in the process?”
[Martin’s helpful hint: don’t worry if the numbers are scary. The goal is to do something! Don’t just feel sad about how much money you’ve been spending.]
What’s this hype about saving money all about bro?
Is saving money really that important? Shouldn’t you be enjoying life?
Yes and yes, my friends.
Saving money is important for two key reasons:
- You’re prepared for the major expenses. Weddings, car purchases, and home loans, happen to all of us. No matter how unique we feel right now, any of us can get married or buy a house one day. Why not prepare yourself for these expenses? You don’t want to be caught off guard.
- You have options. When you don’t have any money, you don’t have options. You’re stuck at a job you hate. You can’t quit. You can’t travel. You just live day-by-day trying to survive.
[What does Martin have to say? You need to check out my piece on how to save up for literally anything. You’ll see how easy it is to reach your financial goals.]
How do you deal with your plastic?
Credit cards are one of my favorite subjects because I’ve come to become a fan of credit cards. If you asked me for my main reasons behind using a credit card I would have to say:
- Helps you track your spending. You can easily track your spending and stay on top of where your money is going with a credit card.
- Provides benefits and perks. There are many perks and benefits that go along with credit cards. I personally enjoy the cash back feature the most. I get money back on my purchases.
- Safer than cash. I prefer to use credit when I travel because there’s certain protection that goes along with it that you just don’t get from cash.
I say that you stop gambling with your financial future! Save the risks for Friday night after a few shots of vodka.
1 thought on “How You Gamble With Your Financial Future Every Single Day”
Cutting back won’t make you rich. But not cutting back (or keeping your spending in check) can definitely make you poor. I guess that’s the perspective I take. You shouldn’t focus 100% on reducing costs, you have to focus part of your wealth management on making money, but you can’t avoid the element of managing your expenses either. It’s all about balance.