By Terry Frisk
There was a time in my life where I believed that if I could just increase my income, then my money problems would be solved. However, every time I received a pay increase, there always seemed to be an additional need. The more I made, the more I spent. This left me with the empty feeling of always needing more. This was when I realized that my problem was not related to my income but how I managed the money I spent.
Overspending is certainly not a new phenomenon. But, there are many additional ways to spend money today than ever before. Many items we see as necessities today did not even exist a generation ago. The first portable cell phone, the Motorola “brick,” was introduced in 1984. Now, Pew Research estimates that 97% of American adults have a cell phone and 87% of those cell phones are smart phones linked to the Internet. This technology allows us to purchase items any time of the day or night from almost anywhere in the world and have it delivered to our doorstep in just a few days.
Another issue is we get a daily dose of advertising for new and improved products to better our lives. How do we deal with all these influences? In Luke 12:15, Jesus said: “Take care, and be on your guard against all covetousness, for one’s life does not consist in the abundance of his possessions.” (ESV)
God has blessed us with an abundance of choices that enables us to enjoy our time on this earth. However, we must be good stewards with our money and be content to live within our means. The secret of contentment is not to add to your possessions but diminish your desires. Below are five tips to help you take control of your spending behavior:
- Before purchasing, ask yourself, “Do I really need this?” Stop and ask yourself whether the product or service will provide more value than it cost or will it just wind up in your next yard sale. I have a collection of tools that I bought and used only once on a project I was working on at the time. Now, if I need a special tool, I look for ways to either borrow or rent it rather than buy it.
- Avoid impulse purchases. It is easy to get caught up in the moment and buy on impulse. Give yourself a cooling off period to ponder the purchase. Go home and pray about it or sleep on it and determine the next day whether it is something that makes sense, and you can afford it. I have found many times that the answer is “No.”
- Avoid buying more than you need. My wife and I were shopping for a refrigerator and found a wide variety of options. Besides the array of door options (2-door, 3-door, French door, crisper drawer and door-in-door), there were models that connect to the Internet so you could remotely see what’s inside. Some also have display screens so you can call up recipes or make shopping lists. Is it really worth the additional cost to be able to look inside your refrigerator from anywhere in the world? Wouldn’t it be easier to use your tablet or old school recipe cards which you can keep close by while you prepare a dish instead of having to go to the refrigerator to read?
When shopping, determine what features are really useful to you and select what fits your needs. We purchased a side-by-side with a water and ice dispenser in the door because we knew we would use that feature daily. It was about one-third the price of the top-end model.
- Limit credit card use. Studies have shown that we tend to pay more for items we purchase on a credit card. Many financial advisors encourage “cutting up” your credit card. However, for many of us, this advice is impractical. I have to travel periodically in my business and it is nearly impossible to rent a car or stay at a hotel without a credit card. If you have a credit card, devise a plan for how and when it will be used. Pay the balance off each month. For Internet purchases, consider using an online payment service, like PayPal or Venmo, that is connected to your bank account.
- Develop a spending plan. Create a budget that allocates your income between giving, savings and spending. Commit to staying within your spending plan. Make sure you allocate funds for a periodic treat as a reward for your dedication.
Financial stewardship is one important step in our faith journey. Striking a balance between giving, saving and spending is a matter for prayerful consideration. Achieving that balance results in financial security in accordance with God’s plan for us.
Terry Frisk is a partner in the firm B2B CFO, providing financial advisory services to small businesses. He also counsels individuals on personal financial matters through the Cathedral of the Rockies Budget Counseling ministry. He may be contacted through e-mail at [email protected].