3671: 3 Spending Habits That Are Setting You up for Failure by Kumiko of The Budget Mom on Money Habits

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[00:01:00] This is Optimal Finance Daily. Three spending habits that are setting you up for failure by Kim Wilson of TheBudgetMom.com. And I'm Justin Malek. I read you articles and essays every single day of the year, including holidays, with permission from the authors. It helps keep us both on the right track. So with that, let's stay on that track as we optimize your life.

[00:01:28] Three spending habits that are setting you up for failure by Kimiko of thebudgetmom.com. There's always a reason why we save too little and have too much debt. People lose their jobs. The economy takes a nosedive and getting a raise is almost impossible. What people don't realize is that we are often our own worst enemy when it comes to our financial circumstances.

[00:01:56] Everyone is guilty of the occasional spending slip up. And sometimes it's hard to recognize that it's happening more than we'd like to admit. Here are three spending habits that will not only kill your budget, but will also set you up to fail financially. Number one, spending money because you are bored. I like to call this zombie spending. Most of the time, you don't even realize you're doing it.

[00:02:22] It's so easy to head to the mall, go out to eat, or spend some time browsing your favorite online store, which you almost always get sucked into buying things you don't need. Everything becomes a distraction to fill our time when we don't have anything better to do. Believe me, I know zombie shopping all too well. One of the biggest challenges I faced was online shopping. It's so easy to be lying in bed, checking your Facebook,

[00:02:50] and get scammed into checking the email you just received from your favorite online store with the message, flash sale, everything 30% off. The result is you end up having 10 things delivered to your front door that you don't need and a huge credit card bill to match. The number one thing that helped me kick the zombie shopping habit was to unsubscribe from all the store's emails. The easiest thing you can do is to stop the temptation.

[00:03:21] Sites like Groupon and apps like Ibotta are great, but not if they are making you spend money you don't have. Look for other ways to distract yourself. Try picking up a new hobby that you can do from home or join a book club. After discovering my love for hiking, I feel more rewarded from a day of exploring the outdoors than I did from spending out of habit. Number two, spending money you don't have.

[00:03:48] This spending habit comes in many different forms. Your tax return, an expected bonus or raise, or even self-employment income can all fall into the category of money that you might not have. These things are not guaranteed income, yet people depend on them. People already plan out what they are going to spend this money on without knowing if they will actually receive it. Have you ever thought to yourself,

[00:04:16] I will use my tax refund to buy that? This is the perfect example of spending money you don't have. Maybe you put the purchase on your credit card, thinking you would pay it off with your tax return, only to find out that you actually owe the IRS. Now you have a credit card balance with no way of paying it off. The same is true with work bonuses. The best thing you can do is not think of this money as guaranteed income.

[00:04:45] You should also never include work bonuses or an estimated tax refund in your budget. That way, if you never receive it, you are not so deep in a debt hole that you can't climb out of it. Instead, if and when you receive this type of money, use it to reach your financial goals of paying off debt or increasing your savings. Credit card debt is another great example of spending money you don't have.

[00:05:12] The most appealing thing about credit cards is the ability to pay later for items that you can receive now. The biggest mistake is using credit to purchase ordinary things like gas or groceries. You can't rely on credit cards if you don't have them with you. I went almost a full year without any credit cards in my wallet. It's okay to have a credit card, but it's not okay to have a credit card that you are constantly using

[00:05:41] because you don't have the cash to pay for things. Rely only on your income and never spend more money than you make. If you decide to use your credit card to make a purchase, make sure you can pay it off in full every month to avoid interest. And number three, spending to impress. Quote, We spend money that we do not have on things we do not need to impress people who do not care.

[00:06:11] Will Smith. It's easy not to care about impressing people whose opinions you don't care about. But it seems like life or death when you want to impress someone you do care about. Maybe it's a friend, someone you want to meet, a co-worker, or family. Whoever it might be, let me be the one to tell you that spending money you don't have to impress someone is not worth it. The funniest thing about these situations is that the person you want to impress

[00:06:40] is probably so busy trying to impress you that they don't even notice all the things you bought to impress them. A generous heart, kindness, hard work, dedication, and true intentions are far more likely to impress someone than possessions. Focus on who you really are, and you won't have to spend a dime to impress someone. Stop comparing yourself to others and learn to appreciate what you already have.

[00:07:14] You just listened to the post titled, Three Spending Habits That Are Setting You Up For Failure by Kimiko of TheBudgetMom.com And I'll be right back with my commentary. Support for today's episode comes from Square, the system powering what feels like half the places I go. If you've ever tapped to pay and thought, whoa, that was fast. It was probably Square. Payments, point of sale, inventory, payroll, invoices, all connected in one system.

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[00:08:37] When your advertising operations fall out of sync, everything else follows. Spotify and Accenture are working together to reinvent the rhythm of ad sales. Using automation, analytics, and smarter workflows to simplify campaign delivery and access better data across the business. The result? Less time spent on operations, more time connecting brands with the moments and fandoms that matter most. Learn more at Accenture.com slash Spotify. Thank you to Kimiko.

[00:09:06] Boredom spending is real, especially now that the store is always right there in our pocket. It's too easy now. You're just sitting on the couch, a little bored, and 20 minutes later, you've bought something you didn't even know existed that morning, and you can even have it delivered that day. And I like her fix for it because it wasn't about willpower. It was about removing the temptation and replacing it with something better.

[00:09:33] Unsubscribing from those emails is such a small thing, but it gets rid of a hundred little decisions you'd otherwise have to keep making. And finding a hobby like she did with hiking gives the boredom somewhere else to go. That quote in the third one is one I've always liked too. We spend money that we do not have on things we do not need to impress people who do not care. Or I guess people who probably don't even notice.

[00:10:01] I'm not here to tell anyone how to spend, but I do think a lot of our spending isn't really about the stuff at all. It's about a feeling, boredom, or wanting to be seen, or just filling a gap. So maybe this week, the next time you feel that urge to buy something, just pause and ask what you're actually reaching for. That little pause can save you more than any budget. But I'll leave it there for today.

[00:10:29] Thank you for being here, wishing you a wonderful rest of your day, and I'll see you tomorrow, where your optimal life awaits.