The enemies of your financial goals

English: A picture of a large drill used in co...

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a.       Discontentment

Nothing will blow your financial goals or budget faster than discontentment. Discontentment leads to purchases that are not in the budget. The neighbors redo their landscaping and so now you feel you need to update yours. You were fine with your landscaping until that happened. So now you go out and update your landscaping, which wasn’t in the budget this year.

b.      No financial training

I’ve talked about this before and this is a big issue. I never had a single class in school on budgeting, managing a checkbook, debt, etc. Unfortunately a lot of training comes from sales people, not teachers. Most of people learned about purchasing and paying for a car from a car dealer or car lot. We learn how to buying a home from a realtor and mortgage company. Many decisions are made based on input from folks who will profit from the sale of the item. They get paid if you buy, they don’t get paid if you don’t buy. It is hard to get unbiased advice in that situation no ma

c.       Impulse buying – using existing resources.

I call this the “I want it now; even if it means I can’t get what I really want later.” This is a trap a lot of folks fall into but they don’t see it as an issue because no debt is directly involved with these purchases. Basically they buy what they want and spend everything. The real issue is that because they are spending all of their money, they do not put money away for bigger ticket items like appliances, cars, and retirement. Because they are not saving for these items they will most likely go into debt at a later time for these items.

d.    Impulse buying – using future resources (BORROWING)

I call this the “I want it now. Therefore, I will borrow!” This is called spending more than you make. Anytime you borrow you are taking future income, that you do not know for sure that you will have, to pay for something you will begin using immediately. That involves risk. Another point to this is when you borrow money you pay interest. When you pay interest your money doesn’t go as far. It is like getting a decrease in your income.

e.     Not understanding the differences between needs, wants, and desires.

This is another area that will mess up your budget quickly. I like to use a drill as an example. For an individual uses a drill 2-10 times a year, their need can be met by a $30-50 drill. Nothing is gained by buying a more expensive drill since the users doesn’t use it much. Most likely the batteries will go bad before the drill wears out.

For the do-it-yourselfer who uses it almost every weekend, the $30-40 drill will not hold up so they will need to move to a $70-130 drill. They may be tempted to move to the professional grade drill but all that is accomplished is they spent more money for a drill when the $70-130 drill would have met their needs.

For the professional who uses a drill every day, they need a drill in the $130-300 range. None of the two previously mentioned categories of drills will meet their need.

I understand buying quality products. In example above it would make no sense for the individual who uses a drill 2-10 times a year to shell out $300 for a drill. The $300 drill in this case is totally a “desire” and not a “need.” Look around your house and look at the items that you have purchased where you bought “desire” instead of need or even a “want.”

Two other areas where we confuse needs, wants, and desires are with homes and vehicles.  Nothing wrong with getting into the “wants” and “desires” as long as it isn’t messing up your overall financial goals.

“Is your current lifestyle getting in the way of your goals?”  – Bryan Cooper

Thank you for reading the My Financial Life Coach blog where we talk about money, goals, family, life events, spending, and economic news. We do make every attempt to avoid the topic of politics but we will bring up economic policies that need communicated. Our job is to educate and motivate you to the debt-free life style.

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Filed under Balance, Budget, Economy, Events, Family, Finance, Goals, Life, Life Balance, Money, Personal Finance, Priorities, Uncategorized

8 responses to “The enemies of your financial goals

  1. Pingback: Should you Make that Purchase? « Healthier, Wealthier, and Wiser

  2. We will get there, all it takes is discipline and determination. I’d say we should also lessen our ‘deals and coupons’ newsletter subscriptions and switch to ‘managing our finances’ alerts. 🙂

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  5. Dan and Shan

    It’s frustrating trying to help those around you (family members, friends) who don’t understand that there is an alternative to borrowing. Our society seems to just EXPECT a loan or payment plan associated with everything! I love your list.

    • I remember many years ago going into a dealership and the salesman would not tell me how much the car cost…he only would tell me how much per month. I bought a two-year old car the following week somewhere else and drove it back to the first dealership. I went in and had the salesman come out to the car. I asked him if he remembered me and he said yes. I told him I bought the car elsewhere because they told me how much, we negotiated, and I wrote the check. I then told him I liked the car he was selling better and would have bought from him had he been willing to discuss price and not monthly payments.

      Thanks for stopping by the blog and commenting. You may want to check out the Facebook page for more interaction. – Bryan

  6. Definitely agree with learning to recognize your needs, wants, and desires. That has been one of my biggest struggles with money. I always catch myself saying “I need new clothes”, “I need a night out”, etc. Buyer’s remorse always follows.

  7. Fabulous points! This section could be a whole book!!

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