The lessons that I so wish I had learnt and mastered much earlier in my life are :-
- paying myself first and
- forming or joining a correct peer group.
I have now set myself on a crusade, mostly through this blog, to ensure that my children learn these two lessons much earlier in their lives.
There have been other mistakes. Lots of them. Perhaps writing about them may help others. The costlier ones will be covered here, in no particular order.
Mistake – Not having a written budget
I have never been “broke” since I started working, Thank God. This has not been due to adroit financial management, but thankfully, as a direct result of my background. I come from a poor family. And the early difficult years have been embedded deeply into my psyche.
Though I have always spent less than I earned, there was no system to it. There were no investments systematic or otherwise.
I started saving I think, around the time, my second girl was born. Not saving what I should, rather an amount that I thought I could “afford”. I have never done a spending budget, personal or family until recently.
I now see and have started enjoying the advantages of having a budget
We may think we know where our money is going, but believe me, we are only fooling ourselves. Though payments like mortgage payments, insurances etc., can be tracked, it is the expenses in the “others” category that end up draining us.
By drawing up a budget, our expenses can be broken up into several categories and tracked category by category. This way, the management is less complicated and drainers can be identified and tackled.
For example, my family now knows the amount we spend on phone bills. It is unduly high and is being reduced now.
Club subscriptions that we have paid for years while hardly using them have been cancelled.
Petrol bills have been cut down by converting the car into a NGV.
And so on.
The danger of not having a budget is that you don’t quite realize where the money is going and blame the wrong people or look at the wrong reasons.
I used to have some quite messy quarrels with my wife over this. Only after the budget was drawn up and discussed have we both realized where our biggest drainers were.
We had debt levels that were too high. This led us to seek cheaper financing sources that did not work out. So now we are disposing off our investment property.
I do believe that the actions taken since drawing up our budget will have a lot more positive impact on my family’s financial well being than the steps taken in the last 3 years!
As an additional bonus, now there is so much better alignment between my wife and me, and in fact, the children in managing our finances.
Don’t repeat my mistake, please draw up your budget. Monitor your spending. Even if it is only for keeping you informed, do it.
And if it is “how to budget” or more “why must budget” information that you need, please read this excellent and most timely post by Free Money Finance.