Stealing from yourself – How do spending habits sabotage your financial future?

Introduction

With each choice you make in the world of money, you are either robbing or gifting to your future self. Small mindless actions of neglect, extravagance, and a lack of foresight are costing our future selves. You might often hear of the word “compounding” used in investing circles, well it applies in the world of bad habits too.

He, who buys what he doesn’t need, steals from himself – Swedish proverb

Ways in which you are stealing from yourself

Let’s explore 6 of the many things you are doing today that might rob your future self financially.

Buying the things you don’t need

High-interest debt

Not delaying gratification

Living beyond your means

Lack of financial planning

Self-investment

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Buying the things you don’t need

Define for yourself what your needs and wants are. We’ve all been sucked deep into a world of consumerism where marketing is constantly targeted at us. It’s a constant barrage of promises of the feeling of elation once we make that next purchase.

Worse still is getting these items on credit which leads nicely to the second point,

 

High-interest debt

The average annual percentage rate for retail credit cards is about 28.93%

Carrying on the balance can quickly lead to being trapped in debt. When income disposable or no disposable is constantly used to service debt, first it robs you of the ability to save for emergencies. When emergencies do occur, you might find that you self accumulating more debt to attend to them. This is a vicious cycle that can keep you in its whirl endlessly.

With monies going towards debt, you also rob yourself of the opportunity to invest, grow wealth, and secure yourself financially.

So before you hand over your card for that next purchase, consider the implications of what the cost is not only on your card statement but also on the future.

Not delaying gratification

Quite simply it takes a lot of graft and hard work to resist those sale signs. They are everywhere these days. On the internet, on your daily commute even in your email inboxes. If it helps, consider unsubscribing to avoid the temptation of taking up another sweet offer.

Living beyond your means

Let us all face it, we’ve all been tempted at one point or the other to signal status. From the pouty toddler preschooler who wants every toy in Ryan’s world, the pouty tween who insists on wanting the Bratz doll her friends are all collecting, to the twenty-somethings all gunning to get the next fastest thing, we tend to want, want, want.

Now as we get older these wants can end up in bigger ways like overextending in real estate by purchasing a home you can’t afford. An expensive home might feel nice to live in; you need to carefully weigh the consequences of a high payment that causes you to stretch your budget too thin.

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You can wind up living beyond your means very easily these days with abundant credit and a culture that has tamed our minds that we are okay to want things even when we cannot afford them!

When you spend more than you make, it can lead to an unsustainable lifestyle which trails you down a path of debt, and ultimately financial stress.

High outgoings would not only put you under financial strain with the constant pressure to make more money, it also rob you of the opportunities to grow your wealth by investing in assets with the money you are earning right now.

 

Lack of financial planning

Now this is multifold because it encompasses how you are spending now (budgeting), investing for the future (retirement), and protecting yourself from unexpected events (insurance).

The famous quote by Benjamin Franklin, “By failing to plan, you are preparing to fail” is why budgets are essential. Budgets are simply a plan for your money; they help you track your money and understand your finances better. When you skip planning where the money goes, you lose by giving your future self a chance to funnel money correctly.

Investing is how we grow wealth, in today’s economy it is impossible to save your way to wealth or retirement. Eventually, we all do get old, and making a financial plan for your retirement or wealth gives a much-needed financial security in old age where you might not be able to work or make as much income as you used to. We cannot put a price on financial peace, it is bliss when you don’t have to worry about the money or bills.

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Insurance protects you against financial vulnerability in the event of an unexpected happening. As a basic, most Midlifers should consider having good health and life insurance. Don’t forget property insurance too if you own a house.

Sometimes, insurance seem like a waste but when the need for it happens it can be a relief for financial costs especially when they are costs you can’t afford.

You might have to seek the help of a professional to explore your investment, insurance options and the tax implications of whatever path you choose to follow. It’s a cost investment worth making for your future self. You would be amazed at how much value this can offer in the long run for you.

 

Self-investment

Now this is not obvious to a lot of people. When we neglect and fail to prioritize our education or skills, it can hurt future earnings potential. If you don’t grow, you limit opportunities to earn more or advance your career.

Nowadays, it doesn’t take the next degree to up your skills. You can attend a boot camp, and teach yourself a new skill with sites like Skillshare, and Brilliant. There are so many options for what you can learn and do.

 

Conclusion

Let’s make a promise, a pledge to our future selves. Say with me (hands on your chest and heads up high J) :

“I no longer steal from myself”

Know that your future self is smiling back at you right now. I wish you nothing but the best with securing your future financial stability and well-being!

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