someone goes into a department store and sees
a big sale on shoes. They don't necessarily need shoes but
they buy them anyway since they are inexpensive and for that
price "you just can't leave it
in the store."
Not having cash on them, they buy with a credit card. When
the bill comes at the end of the month
all the purchases made in that time, many of them sales that
just "couldn't be left
in the store,"
the consumer doesn't have enough money to pay more than the
minimum balance. With
interest that accrues
the sale shoes end up costing
the amount they originally
In fact, it would probably have been
smarter and cheaper
not to buy the sale shoes, but to buy regular priced shoes
when they were needed.
advertisement for an
investment institution that I heard last week really struck
home. It said "You taught your children to drink
responsibly, to drive responsibly and not to do drugs, but
did you teach them how to be financially responsible?"
a fiscally responsible life
seems to be a lost art. The lack
of financial responsibility may have
the advent of the credit card. Credit cards are a
brilliant invention that was supposed to make life easier
for us; instead it taught us that
we can have whatever we want without being able to afford
it. Generally, we don't think about the payment until we get
the bill. The credit card is a tool that helps us
shop, yet it ensnares millions in its grip of debt. People
spend more, pay interest on purchases until their final cost
is much greater than the original purchase price, and then
think they got a bargain. To those who misuse credit cards
it's the American curse.
our financial downfall is
our weakness to
of advertising. Advertisers spend a lot of money to
figure out what will make the biggest impression on
consumers. Most of us are so taken in by advertising and we
buy things that are not
necessity because we buy into the advertisement's message
that we "need" whatever is being advertised. They convince
us to buy things we don't need, when we don't need them and
which we may never use. If
before making a purchase
we stopped to ask ourselves if we really need this item
we would be better off.
general, we see more affluence
around us and we compare
ourselves to others who seem like they are doing better than
us, even if they are in the same financial situation. In
actuality we don't really know how anyone else is doing i.e.
who is supporting them, how much they are in debt etc.
Comparing our lives to others and wanting to keep up with
others is not smart financial planning.
without being financially responsible
pressured finances and many other problems,
including marital issues. Studies show that the number one
thing that couples argue about is finances. Sound financial
planning and living within our means helps avoid that common
friend of mine has a luxury business.
He always tells me, "You have no
idea how many people are struggling to pay for what I sell.
Each one sees the other one doing it, it looks easy and they
think if so and so
can afford it so can I."
told me, "It's not my
place to do so, but I wish I could tell all the people
struggling that they are each trying to live beyond their
means. I find myself at times persuading people not to make
the purchase - with an ulterior motive - because I know I'm
not going to see the last few payments."
all concerned for our
children's future and the best thing we can do for their
financial future is to be a financially responsible role
model for them. When all is said and done, the way we live
is an example for our children.
Perhaps it's time
for us to go back to the old fashioned way.
Don't spend money
unless you have it.
monthly income and don't "borrow" from one
envelope to another.
Children should be
taught to spend their money carefully and not to
use money just because they have it - especially