When you are just starting your career and money is tight, you dream of a day when you’ll earn enough money to make life easy. In fact, it’s hard to imagine the challenges and responsibilities that are associated with earning more income and balancing those with the desire to spend money on some of the finer things. While the desire to splurge and keep up with others by having the latest devices, the newest car, or eating out frequently is more of a psychological phenomenon than a financial one, it certainly can impact your budget and your ability to save for the future.
Creating your budget starts with understanding your personal financial situation, where you value spending your money, where you actually spend your money, and what your long-term financial goals are. However, it also requires discipline to reduce influences that could derail your personal goals. That may be a bigger hurdle than it might first appear. Each of us is influenced by different social pressures and opinions about what success looks like. It may be a weekly coffee, a new phone payment, new shoes, fancy jewelry, cars, vacations, or homes that say, “I’ve made it.” The challenges can be even more difficult when impractical expectations are reinforced on social media, television, or by friends and neighbors, or personal heroes.
Having nice things is not bad. If you are meeting your financial objectives and you can afford extras, that’s OK. If you are spending money to keep up with others at the detriment of your financial goals, you may want to reevaluate why you’re spending on certain items. Here are a few tips to help you stay focused on your budget and long-term goals:
- Create a daily reminder of your financial goals, such as a post-it note or photo on the refrigerator or somewhere that you’ll see it every day.
- Limit your exposure to social media where you may be confronted with others bragging about trips, purchases, or other quick gratification items. Endless scrolling through social media feeds may create constant temptations and distractions from achieving financial goals.
- Practice being thankful for what you have and building in a required minimum time to consider if you really want or need to purchase an item. Separating the instant gratification from the purchase may help reduce the desire and determine if it’s truly needed.
- Consider if you are buying a status symbol or a necessity. It might help to think about if it is something useful for you, something you hope others will notice, or you could easily do without.
The goal for building a budget and achieving long-term financial objectives is not about avoiding things that will make you happy. It’s about achieving your personal financial objectives while living a satisfying life. If you can budget for long-term goals and some discretionary items you enjoy, there is room for both – you can even determine how much you want to spend on these items and work it into your budget, so you don’t risk your longer-term objectives. Just decide if the purchase is about you or about impressing others. Find information on Developing a Savings Plan by signing up for a PERAPlus webinar.