Imagine, 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 which lists 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 more than the amount they originally would have. 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.

 

An 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?"

 

Living a fiscally responsible life seems to be a lost art. The lack of financial responsibility may have begun with 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.

 

Part of our financial downfall is due to our weakness to the power 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 a 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.

 

In 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.

 

Living without being financially responsible leads to 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 pitfall.  

 

 

A 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."

 

He then 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."

 

We are 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.