Money, Money, Money!!!
By Pamelagrace Beatty
“Who took all my money?” I asked myself. Nobody! I spent it myself and I thought I was doing so well. But then came time to do this year’s taxes and I was shocked! During the 2nd year of the pandemic, when I was still not going out, not buying clothes, not traveling and “not” many other things that cost, I still managed to spend more than I should have! Good grief! Where did my money go?
Of course, as I itemized my spending, I began to see some trends. I reviewed all my credit card purchases and saw a lot of small purchases that I hadn’t realized were adding up the way they did. For example, I didn’t do the things I did pre-pandemic when I would go out to dinner with friends; go to clubs with open mic jams, where I would sing; and always purchase food or drink to help the establishment supporting the open mic night. I noticed I bought a lot of canvases and paint during 2021, among other items. Frankly, I still must add all that up, but the point is, at a glance, I had spent more than I realized!
Having Financial Practices
The main problem was, I didn’t have good financial practices! I just figured I was spending responsibly (isn’t that a cute way of phrasing “not looking at how I was spending?”). This year, I am going to enlighten myself on what I’m spending by actually reviewing and tracking my spending (what a concept, yes?). I have always checked my credit card statements to be sure the amounts and items I bought are correct. But, until now, I hadn’t tracked what I was spending and on what. I actually have items I am paying for that I don’t even use, like certain art and marketing apps which I think I will use soon…maybe. I am still doing battle with myself to let go of one of them I have subscribed to—twice—and I haven’t used AT ALL, but keep thinking I will.
It’s like keeping those size 10s in the closet, that you haven’t worn in years, because you just know you will get back down to that size someday. That may just be a female thing. I should either wear it or let it go…my rant to myself…sorry. But you might have something like that you are paying for that you aren’t using, like 150 channels on cable or something. Or maybe magazines (does anyone else still read magazines besides me?) or some service you don’t really need for your house or car, but you are still paying for it just in case you need it one day.
Budget? What Budget?
Obviously, I had not set a budget. Didn’t even like the word “budget.” I’ve heard people say, “I can’t afford that. It’s not in my budget.” That always sounded weak to me for some reason. I like the idea of being able to buy what I want. So that added up to my not needing a budget because I was sure I could afford what I was buying. But how did I know that? By instinct. Well, my spending “instinct” has apparently become extinct. When I was working regularly, it was fine. I kept up with my spending. Now that I am retired and not always working and still spending, well, it’s a different story. I need to be more actively aware of what I buy.
Enter “Spending Plan.” I like that title much better. “Budget” seems kind of victim-like to me. “Spending Plan” seems like I am taking things into my own hands and being responsible with my spending. It may all sound the same to you but use whatever helps. Of course, before making a plan, you have to first review what you are spending your money on so you can plan and spend more realistically.
For example, once the pandemic hit, I immediately eliminated expensive vacations. I usually took one big one a year. The vacation frequently involved travel and living accommodations. Of course, the pandemic caused us all to travel less, if at all. As a result, cutting those out was not even an option. I thought that would make for large savings. It did for the first year but not the second. That is when I realized how important it was for me to look into my spending habits!
Some experts suggest the following as a guide for a “spending plan”
- Housing: 25-35%
- Food:10-15%
- Transportation: 10-15
% - Insurance: 10-20%
- Utilities: 5-10%
- Savings?
The Water Heater Died – Rats!
A very important part of that spending plan is saving. There should be a “rainy day” fund. If you are living in a place you own, something is always going to need updating, fixing, or replacing. I imagine we all know we should have funds put aside to manage those kinds of unexpected costs. It might be a good idea to have three savings accounts, though. I have one now for going out to dinner or other small expenses. I have one for replacing the stove or heating system as well because I already know the furnace is struggling and will one day give out. I am procrastinating because it has gone 7 years past the time the service guy told me it would last. My home is still nice and warm…but noisy. So, I have a stash set aside for when the furnace dies. The third is retirement savings, unless you are already retired or future expenses. These might include trips you plan to make, or for some of the younger folks, college funds for the kids, or a first house, or some other major cost items like a new car.
I suggest doing some research online, or wherever, and checking these figures. What’s most important is to have some guidelines on where to start as you create your spending plan. Spending is personal, and different things matter to different people. I have friends who have spent tons of money on traveling, skiing, deep sea diving, home improvements, new cars, education and so on. Where you spend your extra cash all depends on what is important to you or what you are passionate about. I’d rather travel than landscape my yard. So, I do just enough to keep the lawn nice and spend my dollars on going somewhere.
It’s important to identify where we want to spend versus just being on automatic, like those apps I wasn’t using. It is also important to feel we are in control, not victims, and that we don’t feel deprived because we can’t spend the money we would like to. This may be the case for retirees who are on a “fixed income.” I have heard people say, “I can’t do that because I am on a fixed income,” and it sounds like whining to me. True, our incomes may be more limited than in the past, but we can still find a way to enjoy the things that are important to us.
If buying clothes was one of your joys, you can still do it, only not as often. Maybe buy just one new outfit a year. I confess I am a fashionista at heart and used to love to buy new clothes. Now, I don’t have that many places to wear them, so spending lots of money on a new wardrobe is unnecessary. To satisfy my desire for new and different, I experiment in redesigning clothes I already have. It engages my creativity, and Value Village (a nice, inexpensive used-clothing store) has become my best friend! I love buying jeans from there especially. At $5 – $9 I can afford to make mistakes as I refashion them into jean skirts and bell bottoms. I have loads of fun doing that and having different styles of denims fits into my more relaxed life as a retiree.
Stay Steady
I did budgets years ago, and stuck with them, until I didn’t. Had I stuck with budgeting I would be far better off now, so it is important to make that spending plan and stay with it. Some things are long term, like saving for the kids’ education. Others are shorter term like an exotic vacation, although that can be long term too. I have taken several years to save for some vacations like my first cruise, or my trip to New Zealand.
Everybody Needs Somebody
Perhaps your credit card debt has grown too large. Paying it down could take a while, depending on your financial position, but staying with the spending plan and not continuing to accumulate debt on the card(s) is essential.
There are debt-management planning groups and financial planners. There are also debt consolidation companies (evaluate those carefully). There are various ways to pay down debts like transferring an amount with a high interest rate to a credit card with a lower rate. Usually, the rate only lasts for a year or two, so be sure and read the small print.
What is most important in dealing with your finances, is to recognize that you can take charge of them, and you can also enjoy your life by re-thinking how you see your situation. We always have more available to us than we see. We also have more than we acknowledge (because we don’t see it?). Being grateful for what we do have and being good managers of our resources will help keep us calm and able to enjoy our lives more, whether we are retired or still working.
