Stop the financial leaks
In the early years of our marriage, my wife and I used to lavish each other with expensive gifts for Christmas, birthdays, and anniversaries, without regard to the impact of our finances. We figured we would just “worry about it later.”
It didn’t take long learn that spending without regard to the impact on our finances was destructive and irresponsible behavior. As with most areas of discipline, we needed to learn this ourselves – though there were plenty of voices of reason out there (sounds like a teenager, right?).
Today, we still try to get each other nice gifts; however, we have grown to appreciate the thoughtfulness behind a gift more than the dollars spent.
The temptations to splurge still exist, along with additional rationalizations like, “we have the money, we can so buy this.” This is now a matter of can versus should, which is easily seen in high-priced items such as $100 jeans or $300 purses. You may have the money to buy these items, but you ask yourself, “should I?”.
This matter of can and should is easily lost in the smaller expenses in our life. For example, have you counted all the services for which you pay to watch tv? And then there is online shopping – which in 2020 became an even bigger help in meeting our need for consumables.
Online retail shopping increased by 31% in the second quarter of 2020, followed by another 37% growth in the third quarter (July through September). Companies like Amazon, Postmates, and Ship Mates have certainly made quarantine life a little more bearable. With such convenience comes the temptation ease to purchase more than we need.
We end up having so many leaks in our household cash flow that we find ourselves wondering where all the money went, and why we are not saving more and are unable to give more.
There is good news! The wise king who lamented, “There is nothing new under the sun” (in this case our tendency to lose track of our dollars) also advised, “Be thou diligent to know the state of thy flocks, and look well to thy herds.” (Proverbs 27:23). Did I lose you in all that farm talk? It is easy to overlook the wisdom in this proverb. In today’s vernacular, we would say, “Be diligent to know the state of your bank accounts and look well to your dollars.” It is wise to know where your money is going. When you have a clear picture of your cash flow, you can make clear choices in how to improve (and re-direct) your finances.
If we are going to save more, which is a biblical principle (see Pro. 6:6-8, Pro. 21:20), we will need to spend less. We tend to spend more than we think we do, which is why doing a short little exercise is so valuable:
- Pull up the last three months of your household bank statements.
- Identify the variable expense categories in your household (usually groceries, entertainment, dining out, shopping). These are areas where you have more flexibility – spend more, or spend less.
- Highlight each transaction that is a variable expense (digitally or physically – I like to print my statements and use a highlighter marker).
- Add up the totals spent in each category for each month (calculate groceries separate from entertainment, for example).
- Consider how much you are spending in each category (some, like myself, will have their jaws drop when they see how much is spent in certain categories).
- Ask yourselves if you can survive on less in one or more categories. Identify a dollar amount that you can reduce monthly spending.
- Take those recaptured dollars and re-direct that same amount, each month, to your savings. For those who have been desiring to give more but felt they could not, these recaptured dollars can know be re-directed toward giving.
What Solomon penned nearly three thousand years ago rings true today. It is amazing what financial improvements we can enjoy when we simply take a diligent look at where each dollar is going!