There’s no question about it, it’s easier to spend than it is to save. Saving isn’t a natural event – it must be planned. Let’s face it, many people don’t save, and on top of that they spend more than they take in. In the long run, that’s a recipe for disaster. Unfortunately, many individuals think they have a handle on their finances only to find out, when it’s too late, that they’ve been living beyond their means.
A recent article in the mint.com blog titled “7 Signs You are Living Beyond Your Means” looks at several key indicators that might help you realize that you might be heading in that direction. If you find out that you are on that road, what can you do about it? An understanding of setting up a budget and putting together a plan that will insure that you bring in more than you spend is a good place to start and that is addressed in Chapter 2 of Personal Finance, Turning Money into Wealth. Then in Chapter 5 we introduce the concept of “paying yourself first” which starts by automating savings – that is, having a certain percentage of your income automatically deducted from your paycheck and placed into your savings account. As we said at the start it’s hard to save and automating your savings makes it easier. This might be the start of keeping your finances under control.
Class Assignment and Discussion:
- Take a look at the article “7 Signs You are Living Beyond Your Means,” have you ever done any of these things? Come up with your own “sign” that you are living beyond your means. . Be prepared to discuss your response to both of these in class.
- What are you currently doing to keep track of your financial situation?
- How would “paying yourself first by automating your savings” help you to control your spending?