Some financial things are out of your control. But it’s also really easy to come up with excuses for not saving money, or not investing, or not fixing your bad financial habits. If you’re not careful, these excuses will put you in a terrible position in the future, and you might find yourself with no money at all.
Read on for the money excuses that keep you poor:
1. I’m not ready to save. I’ll do it when I make more money.
If everybody did this, nobody would ever save anything. It doesn’t matter whether you make P10,000 or P100,000 a month — you should be saving a little bit of that.
“But I don’t feel ready to save yet!” you might protest. So you procrastinate saving later, and later, and before you realize it you’re 60 with no savings to speak of. You don’t want that. So just accept that you’ll never feel ready, but buckle down and start saving anyway. Once you get going, it’ll be easier to keep up the good money habits.
“If you wait for your muse, you’ll be waiting forever,” Thomas Pychyl, author of “Solving the Procrastination Puzzle” and associate professor of psychology at Carleton University, says on LearnVest. “For example, I like being active, yet still, at any given time, I think, ‘I don’t want to do that.’ That’s when I say to myself, ‘Just get started.’ ”
Solution: Just get started! Save whatever part of your income you are able to. The recommended amount is 20% of your income should be put towards savings, but if that’s truly not doable for you, start with a smaller amount, like 5%, and then increase it as you make more money. For more on how to pay yourself first, read our step-by-step article.
2. I don’t need an emergency fund!
So you’ve had it pretty good and haven’t had to deal with surprise expenses yet. That’s nice, but this doesn’t mean you don’t need an emergency fund for life’s nasty little surprises. Expensive emergencies can happen to anyone — including you!
Having an emergency fund is an important step to having a successful personal finance situation. If anything bad — or worse, expensive — suddenly befalls you, your emergency fund is there to soften the blow.
If you don’t have an emergency fund, something like your car breaking down could put a huge dent into your finances. With an emergency fund, you simply dip into it when the need arises, and your regular budget isn’t affected. Without one, you might have to go into debt just to finance your emergency, which can throw your budget way out of whack and leave you without any room to breathe.
Solution: Don’t let emergencies put you in a financial hole. Put a little bit of money towards an emergency fund every month. Don’t know how to start your emergency fund? No more excuses — here’s our guide.
3. I’ll just pay the minimum on my credit cards.
A credit card is a great personal finance tool which can actually save you money — if you use it well. But let’s say you owe P10,000 on your credit card, and that seems like too much, so you just pay the 5% minimum — P500. With a 3.5% monthly interest, not only will it take you 33 months to pay off your card, but you’ll end up paying a total of P6,396.47 extra in interest! That’s almost 64% more than your original debt!
Some cards are even more devious, with only a 3% minimum payment, but with a 3.5% monthly interest. If you only paid the minimum, you would just end up owing the bank more and more money. Only paying the minimum is a sure way for you to lose huge amounts of money over time.
Solution: Try to pay your credit card bills in full every month. If that’s impossible, try one of these strategies to beat credit card debt. Even small extra payments in the form of “snowflakes” can help you. Find out more about that method here. The faster you can get rid of credit card debt, the more money you can put towards your financial future.
4. Living paycheck to paycheck is absolutely fine.
You’re almost running out of money, but it’s all right, you tell yourself, because payday is tomorrow. This is called living paycheck to paycheck — or, in Filipino, isang kahig, isang tuka. And while this may be normal for a lot of people, it’s not going to lead to financial stability in your future.
Living paycheck to paycheck means you don’t have a financial safety net. Every paycheck you get is barely enough to cover your expenses, and more often than not, this means none of your money is going to savings — no emergency fund, no anything. So when something happens that your paycheck can’t cover, you find yourself maxing out your credit cards or taking out a loan, which puts you on the debt cycle.
This problem isn’t limited to low-income people; sometimes, because of lifestyle inflation, even when you make more and more money, you still find that at the end of the month, your money has disappeared towards frivolous expenses.
5. Who needs health insurance anyway?
Not protecting your health means not protecting your financial security either. A single visit for a checkup can cost P500 or more, depending on the hospital. Basic medical procedures run into the tens of thousands of pesos. And for more serious conditions which require confinement, those could cost P100,000 per day. When you don’t have health insurance, you shoulder all those costs yourself.
Health insurance plans can cover emergency care, preventive consultations, and a whole host of other health-related expenditures. You’ll even get free annual checkups just to make sure your body is in tip-top condition.
Just because you’re not sick now, doesn’t mean you’ll never get sick. And health insurance helps mitigate those unexpected, high medical costs. You might balk at the P15,000 a year premium, but that’s nothing compared to a P600,000 procedure that puts you in debt and keeps you poor.
Have you found yourself using any of the above excuses that keep you poor? It’s time to stop procrastinating and start doing. The sooner you can get yourself on the right financial track, the less excuses you’ll have, and the better you can make your financial future.