Finance Fridays… knowing where the money’s going.

Admittedly, I’m still chipping away at the basics; however, knowing where the money’s going is becoming my go-to phrase. 

Following last weeks discovery that I had spent well over $400 on Starbucks and other designer-coffee products in the last three months, I was inspired.  I shared this tally with more people than planned – not out of some misguided sense of pride, but in response to the overwhelming realization that my peer group is as clueless about their financial-health as I am.

Incidentally, my peer group consists of professionals, semi-professionals, and plenty of folks with ultra-high-achiever goals.  What i’m saying is, I don’t hang with a circle of dummies.  Or wait – do I? More often than not, the conversation was some derivative of the following:

me: “You’ll never guess how much I spent at Starbucks in the last three months… over $400!!” 

(look of shock, disgust and perhaps a little judgement from my friend)

friend: “Oh- that’s awful!! What a waste of money.  How often do you go?”

me: “About once a day.”

(colour drains from friend’s face)

friend: “Oh no…  sometimes I go twice a day…  I’m afraid to look… “

But why?  Why are we afraid to look?  We all (theoretically) want to be smart with out money, to have something to show at the end of the week / the month / the 50-year career that we’ve devoted half our waking lives to.   Why are we so afraid to look at where our money is actually going?

We live in funny times, full of lamentations of the loss of the so-called “middle-class”.  Publications are wracked with headlines, all torn-up about how the rich are getting richer and the poor are getting poorer; as the Occupy Vancouver clan moved through Vancouver last year, I watched in amusement as more than a few protesters lugged their signs across Hornby street to pick up a round of cappuccinos for the crew.  Yes, there is clearly a disproportion in distribution of wealth; however, standard practice dictates that every two weeks or so, the demonically-labeled 1% doles out paychecks and salaries to the rest of us.

but make no mistake: what we do with the cash from that point on is up to us.

if we line up, wallets open, eager to give it right back to them…  don’t they kind of deserve it?

I understand this may be an unpopular opinion, but I believe that- at least in Canada- we are keeping ourselves poor.  We live in one of the most blessed, stable, prosperous nations of opportunity in the world.  At most recent count, our unemployment rate is 7.6%, and because we live in this glorious land, those 7.6% are entitled to certain financial benefits (provided they are actively seeking employment and actually willing to work).  Not too shabby.  The other 92.4% of us who earn (at least) a minimum-standard wage, quite frankly, have it pretty great.  We’re blessed, but clueless as how to steward the amazing stroke of fortune that we were born with just by ending up here.

The entitlement mindset tricks us into believing that because we work /blog / haven’t committed any major crimes (recently), we deserve to reward ourselves with Stuff that is disposable, effectively decreasing our overall net worth every time we pat ourselves on the back for good behavior.

Our concepts of reward, worth and goal are in complete opposition to the reality of our situations.  Look at what our parents did with what they had; at this point in my career, I earn only slightly-less than my father did at the peak of his; however, he was able to support a wife, raise four kids, own his home and take the family on vacations every year.  He is now enjoying the retirement that he was able to take, just as he planned.  Me? I live in 500 (rented) square feet, had a $40 NSF fee for my YMCA membership last month, and haven’t been on a vacation outside of Canada on my own dime, well, ever.    At some point, it’s clear that this isn’t at all because i’m a victim of the 1% – it’s because I’m a victim of my own mentality of entitlement.

Don’t I deserve to live in Vancouver?  and fly home to Ontario a few times a year?  Don’t I deserve to dress well?  How about that health club membership, dinners out with my friends, yoga pants, cell phone, upgraded laptop, new lens for my SLR, etc. etc. etc.  At the point of purchase, the word “need” comes so easily.   When I think of myself becoming a mother in less than six months, and what I want to be able to do for my child, I choke on the word.

Yes, if you’re like me and have never printed your bank statement and taken a few highlighters and a calculator to it, it’s scary.   It’s even scarier if you multiply the amounts you find that you’ve dithered away by the number of years that you’ve been working.  The only thing worse would be multiplying again by the number of years you have left in your working life if you choose continue a blind eye.  It takes effort to change the course of the Titanic that is speeding toward the financial iceberg, but it has to be done, or else we’re heading the way of the poor violinists.

Last week…  after finding that I had spent over $400 at Starbucks in three months, I made a commitment to only go once per week.  I was able to achieve that goal.  The financial benefit of this adjustment will be that instead of giving over $1200 to Starbucks in 2012, I will give them approximately  $260, leaving me with around $1000 extra in my bank account by December 31.  With smart investment this choice will redirect over $30,000 back into my own personal wealth throughout the remainder of my career.

This week…  I look at the amount I spend on lunch breaks at work.  Similar to the designer coffee debacle, I have spent $488.26 on lunch breaks over the last three months.  My commitment this week is to plan ahead and bring lunch and snacks with me, meaning that I need to establish a grocery budget.  More on this next Friday. 

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