DOES it seem that you never have quite enough spending money? If only your allowance were a little larger, you could buy that game you want. If only your wages were higher, you could buy those shoes you “need.” However, rather than fret about the money you don’t have, why not learn to control the money that does pass through your hands?
If you are a young person living with your parents, you could wait until you leave home to learn how to manage money. But that would be like jumping out of an aircraft without first learning to use a parachute. True, a person might be able to figure out what to do while hurtling to the earth. How much better, though, if he learned the basic principles of using the device before jumping!
Similarly, the best time for you to learn to manage money is before the harsh financial realities of life confront you. But it will only protect you if you learn how to control your spending. Doing so will boost your confidence and will increase your parents’ respect for you.
Learn the Basics
Have you ever asked your parents to explain what is involved in maintaining a household? For instance, do you know how much electricity, heat, and water cost each month and how much it costs to run a car, to buy food, and to pay the rent or the mortgage? You might think such details would be boring. Remember, though, that you help incur those bills. Besides, if you leave home, you will have to start paying for these things yourself. So you might as well learn about them. Ask your parents if you can see some of the bills, and listen closely as they explain how they budget for them.
Recognize the Challenges
Admittedly, controlling your spending is easier in theory than in practice, especially if you live at home and receive an allowance or earn money from a job. Why? Because your parents are likely paying most of the bills. So a large percentage of your money may be available for you to spend at will. And spending money can be fun. “Spending is very easy for me, and it is enjoyable,” admits Paresh, a young man in India. Sarah, from Australia, feels similarly. “Buying things gives me a thrill,” she says.
In addition, your peers may pressure you to spend beyond reasonable limits. a college student, aged 21, says: “Among my peers, shopping has become a major form of entertainment. When I’m out with them, there seems to be an unwritten rule that you must spend money if you’re going to have fun.”
It is natural for you to want to fit in with your friends. But ask yourself, Am I spending money with my friends because I can afford to or because I feel I have to?’ Many people spend money in an attempt to boost their reputation with friends and associates. This tendency can cause real financial problems for you, especially if you have a credit card. Financial adviser Suze Orman warns: “If you feel the need to impress people with what you have rather than with who you are, you are at high risk for credit card abuse.”
Instead of maxing out your credit card or spending your whole paycheck on one night out, why not take a college student advice”When I go out with friends,” she says, “I plan ahead and calculate a limit to my spending. My pay goes straight into my bank account, and I take out only the amount I need for that outing. I also find it wise to go shopping only with those of my friends who are careful with their money and who will encourage me to shop around and not buy the first thing I see.
Learn From the Answer No
Even if you do not receive an allowance or money from a job, you can still learn valuable lessons about money while you are living at home. For example, when you ask your parents for money or ask them to buy you some item, they may say no. Why? One reason might be that your wants cost more than the family budget can bear. By saying no to your requestalthough they might prefer to say yesyour parents are setting you a fine example in self-control. And self-control is vital to good money management.
Suppose your parents can afford to say yes to your requests. Even then, they may still say no. You may think that they are just being mean. But consider: They may be trying to teach you the important lesson that your happiness is not dependent on obtaining everything you want.
The truth of those words is borne out by the experience of many youths whose parents buy them everything they want. Soon youths discover that they are never truly content. No matter how many things they accumulate, they always feel the need to add just one more purchase to the pile. In time, youths who expect to receive their every request may become unappreciative adults.
Money Is Time
Some cultures have the saying, Time is money. This emphasizes that people must spend time to earn money and wasting time is wasting money. The converse of this saying is also truemoney is time. If you waste money, you are really wasting the time it took to earn that money. Learn how to control your spending and you learn how to control your time. How so?
HOW TO TAKE CONTROL
How much money have you spent over the past month? What did you spend it on? You don’t know? Here’s how to take control of your spending before your spending takes control of you.
Keep a record. For at least one month, record the amount of money you receive and the date you receive it. Describe each item you buy and the amount it costs. At the end of the month, add up the amount received and the amount spent.
Make a budget. On a blank page, draw three columns. In the first column, list all income you expect to receive in a month. In the second column, list how you plan to spend your money; use the entries in your record as a guide. As the month progresses, write in the third column the amount you actually spend on each of the planned expenses. Also, record all unplanned spending.
Adjust your plan. If you are spending more than you anticipated on some items and are accumulating debt, adjust your plan. Pay your debts. Stay in control.