Small coins "add up" to larger savings, just like small and recurring purchases make for a much larger credit card bill.
I have a friend who likes to say, “It adds up.” He says this when he’s referring to saving a little money here and there. Well, of course it adds up, and when we’re saving money, it seems to take forever to amount to anything appreciable. But, that’s not the case when it comes to spending money, especially when we’re buying things with a credit card.
Whereas our savings grows at a speed equivalent to grass growing in the front yard, the credit card bill seems to multiply faster than rabbits. Why is that? The answer is found, in part, in another adage we’re all familiar with – a watched pot never boils.
Just take a look at your credit card statement and go through the list of purchases. They’re probably not big purchases – a meal here and there, a couple of things at the auto parts store, several small items from the grocery store, a purchase at the home improvement store, and a couple of items from the office supply store. Nothing extravagant, no attempt to buy happiness, and for the most part, all of those purchases were based on need – they weren’t purely discretionary purchases.
The problem is that you’re staring at a $2,754 credit card bill, and you’re wondering how in the world it got to be so high. There must be a mistake. No, the answer is simple, it adds up.
You see, you’re watching your savings grow, and that’s why “the pot” never seems to boil. It’s also because there is only so much you can “shave off the top” and put away in savings. On the other hand, what we spend on credit cards is out of sight and therefore out of mind. It’s the pot we don’t watch, so you can be sure it’s going to boil over. And, the money available to spend always far exceeds what’s available to save, thus making it especially easy for the pot to boil over.
There are some simple techniques we can use to better our situation. Try these:
- Log credit card purchases in your checking account, and keep your checkbook register current. It will show you just how much and how fast you’re depleting the money you have.
- Pay cash for most everything. That’s one sure way to see money heading out the door.
- Reassess how you determine need vs want. Much of what we think we need is really a desire wrapped up in a disguise of our own creation.
- Find other, cheaper ways to satisfy your interest in buying things. Garage sales are great for that. You can satisfy your interest in shopping, and when you find a purchase, it’ll probably be at a 75% discount or better. Quite often there will be a box marked “free” and that’s always a good price.
- Busy yourself with activities that make money instead of allowing yourself more time to spend money. That’s a double-edged sword in your favor – less time for spending, and more time dedicated to earning.
- Make a game of it. Challenge yourself to resist spending, and set some realistic goals. Do the same with savings. Then, after a goal is reached, reward yourself in a frugal way. Sometimes your reward comes simply from seeing a tiny monthly credit card balance and a much larger pile of savings.
- Get a suitable financial mentor lined up and make use of their skills and experience and attitude. Try out their suggestions to see how they can work for you.
Many of us out there have a difficult time handling credit, and for those individuals, a credit card is probably the wrong financial tool to have handy. Nevertheless, we all need to learn how to manage our credit more effectively. I say this because changes in the marketplace strongly suggest that we’re headed in the direction of credit and debit cards being a necessity – some establishments don’t accept cash because it’s an attraction to criminals, and many places don’t accept checks because of a different type of criminal activity.
No matter what payment or savings mechanism you prefer to use, it adds up, and it always will. It’s up to us as individuals to determine how best to make that financial fact of life work in our favor.
