Money Isn’t About the Numbers

You know you need to save for your future. You may have children who will go to college. You will want to retire. You may need to help your aging parents. Every month, you are determined to start putting away part of your paycheck, but you don’t. Each month, something else – new clothes, a weekend getaway, expensive restaurants – consumes your cash flow.

When you prepare your budget, it all looks good on paper: You make enough to pay all your basic bills such as your house payment, car payment, groceries, insurance, utilities – plus some left over to save for the future. Logically, the numbers work, but you still may be unable to save and invest and to stick to your budget.

Why? Something else must be more important to you than your future goals. How you are handling your money isn’t about the numbers – it’s about your priorities and values. Once you understand what is really driving your actions, you can figure out ways to better stick to your budget.

Going out to nice restaurants may not be about the food but about regularly socializing with close friends. Taking a weekend getaway may help you deal with a stressful job. Buying that new car may help fulfill the desire to “keep up” with friends and family.

While spending money on these things may provide a very nice lifestyle now, it will not continue after you retire if you cannot save now. What is driving you to spend everything today at the expense of tomorrow? Emotions typically play a big part in our money decisions and can override our logic. Consider how you feel when you decide to make a purchase or take a trip – it could explain your spending habits.

Decisions to spend or save can also be driven by learned behaviors. How well your parents handled money can carry over into your habits. Your view of money as “good” or “bad” can be deep-rooted thoughts that also affect your decisions.

Simply recognizing what may be directing your spending habits can help turn things around. If your desire to socialize is taking your extra funds, perhaps you can find less expensive ways to be with friends. Try meeting for a hike or a cup of coffee. If your friends invite you to travel to Europe for three weeks, don’t be afraid to pass. You can socialize with those same friends doing other things that are more in line with your budget.

Wanting a certain status in society can be a big driver in our money decisions. Wearing designer brands of clothing, driving expensive cars and buying homes in certain zip codes makes a statement. Those “statements” may mean living beyond our means and preventing a nice lifestyle down the road.

If you are creative, you can have your cake and eat it, too. Find designer clothing at discount stores. Drive a nice car that’s a year old with 15,000 miles. Buy a very nice house two zip codes away that fits in your budget.

If you can determine what is really driving your spending decisions, you can probably figure out how to solve those emotional needs another way and stick to your budget. Life is a series of choices made every day. When it comes to money, our choices are often led by our emotional side. Do your best to listen to your logical voice telling you to save and invest for the future, even if your emotional voice may be stronger when current wants are right in front of you.

This commentary originally appeared May 6 on TheCasperStarTribune.com

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The opinions expressed by featured authors are their own and may not accurately reflect those of the BAM ALLIANCE. This article is for general information only and is not intended to serve as specific financial, accounting or tax advice.

© 2017, The BAM ALLIANCE

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Connie Brezik, CPA/PFS, CFP®

As a wealth advisor at Buckingham Strategic Wealth, Connie works with clients to form a comprehensive financial plan tailored to their individual circumstances, one that includes portfolio management, tax strategies, wealth transfer considerations, retirement analysis and education planning. She welcomes the chance to help clients work through difficult situations, finding solutions that they may not have thought of and guidance about what to do if their plans don't work out as anticipated.

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