Tuesday, April 18, 2006

Spending Habits

Spending Habits

Again, the problem is you, not the economy or world politics

To see what I mean, look at the Ahmads, married with a combined Annual income of $60,000.They felt they didn’t spend extravagantly, but they were nonetheless concerned that they couldn’t seem to save any money. ‘‘We don’t drive fancy cars or take big vacations and our kids don’t have the latest Reeboks,” they told me. But we can’t seem to get ahead.” Needless to say, the Ahmads didn’t know where their money was going, so my firm helped them figure it out. The Ahmads commuted to work separately and here’s what we found:

When they each got to the office, each would buy a newspaper ($.1.20), Coffee ($.1.00), and a doughnut ($1.00). In a mid-afternoon break, they’d buy a candy bar ($.1.00). Without knowing the other was also doing this, each was spending $4.20. a day, for a daily total of $8.40. With 20 working days per month, they were spending $168 per month, or $2,016 a year And guess what happens to the money you earn before you receive it? It gets taxed. In other words, the Ahmads had to earn more than $2,600 in order to net the $2,016 that they frittered away on candy and soda. Then they came to us saying, “We can’t seem to save any Money.”

Have you ever withdrawn $50 from an automatic teller machine, yet find your wallet or purse empty just a few days later? Have you ever asked yourself, “Where does all my money go?” Like the Ahmads, you probably are piddling it away. You have absolutely no idea you’re doing it, because if you did know, you would stop instantly, for there isn’t rational human being in the world who would tolerate such nonsense. But we all piddle money away because we don’t pay attention. The Ahmads were spending 3 percent of their annual income on….Nothing. To avoid this problem, you’ve got to look at your spending habits, for that’s where you’ll find the key to your financial future. If your spending habits are causing you trouble, You can learn how to fix them.

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