I am a father who prides myself in being an expert manager of money and a financial role model for my kids. I am an expert at saving money, building wealth and I feel pretty good about myself. I know that I am getting ahead each month, each week and each day by making a whole bunch of small but correct decisions with my money. When we have a solid foundation to build on it becomes easy to increase our wealth and make decisions that direct us toward our goal of being financially independent.
But overconfidence can be the start of a downwards spiral. When complacency sets in that’s when things start to go the wrong direction. We feel that because we have put some good habits in place and we have done so well with reorganizing our affairs we can let our foot off the gas a bit. A few extra dollars spent here a few more there. We don’t really need it but we’ve done so well and we’re way ahead anyways. That’s when spending creep sets in. I’m not saying we can’t splurge on something now again but “beware the creep”
Hold on. What’s that on my credit card statement?
Examples I have found of spending creep in our household spending recently are;
One off spin classes, when we own many bikes-go for a bike ride
Yoga, how can they charge $15-$20 for a 75-minute class?
On demand movies, when we have a Netflix subscription-watch one of the thousands on Netflix
I-tunes songs, when we can listen for free on YouTube
Coffee out when we can make it at home for pennies a cup
I-tunes cloud storage…??????? Do we really have that much we need to store?
Annual photo software subscriptions
The above are some of the small ones that drive me nuts as I see no need for them. But common spending that adds up more quickly are as follows;
Eating out fast food
Work lunches out
Bottles of wine and six packs of beer
Toys (we are fairly good at this) Its’ usually the grandparents
Costco, they have damn good deals on clothing
Little by little these things creep back into our regular routine. Each one by itself is no big deal we think. Of course, we’ve all seen the example of a $2 coffee per day measured over a week $14, a month $60 a year $720, 5 years $3600 or $7200 over 10 years. In addition, if we had invested this money instead of spent it the savings would compound even further. Then we add the coffee on top of the yoga, on top of the fast food on top of the…you get the picture. Pretty soon we are wondering how we are going to find enough to pay the credit card statement.
That is why doing a budget regularly is so critical. It allows you to find all these little things and weed them out before there becomes more of them eating away at your cash flow, you net worth and ultimately your freedom. And, of course support your kids by acting as a role model and instilling these habits at a young age when they are more malleable.