What is the Impact?

How many decisions do you think you make a day? One Hundred, five hundred, maybe a 1,000… Well, before I give you the answer, what do you think?

According to a quick google search it is estimated that and average adult makes about 35,000 decisions a day. That is quite a bit, but when you stop to think about it, many of those just happen without your realizing it, you are on auto-pilot. You got out of bed, hopefully brushed your teeth, maybe worked out or decided not to. The list goes on. The majority of these decisions have an impact overtime on how we will live, what we will spend our money on and how we will feel.

I could spend time breaking down each of these areas of decisions, but I really want you to take those thoughts now and apply them to your spending habits. If you are going to change your spending habits and get control of your finances, this is where it all begins. A great book that I highly recommend is “Know Yourself, Know Your Money” by Rachel Cruz. It gets to the heart of the type of person you are when it comes to money, what drives you, what motivates you to spend and what type of person are you when it comes to money.

For me, it is clear. I’m a saver by nature. When I got my first job and moved to Cincinnati, OH, my now wife and I were preparing for the wedding and working to pay for everything we could, with the help of her parents and mine for some items. I got a signing bonus and everything went towards the wedding, as paychecks came in, they all went to cover any expenses. When we got married, all our wedding money went into 2 buckets, honeymoon spending and saving. Overall, we put $6,000 away to plan for future needs (bed, furniture, mattress…) when we got our own place. That is my nature and in general it served us well over time, despite a handful of mistakes along the way.

The other side is the spender, these people just like to buy things, it could be for them or for others. As paychecks come in they spend. Now, most everyone has a side of them that leans towards one way or the others, we are not all one sided, but we have to know our default or nature to know how we are going to spend. While I am a saver, I have let the spender side of me get the best of me, the motorcycle was one of them, let's just say I enjoyed it, thankfully I paid cash for it, and lots of upgrades over the years. It was definitely not a well measured decision. All of this gets me to the point I’m trying to get to, which is the impact of the decision to buy.

First, know the type of person you are by nature. Then based on that, you now know your tendency. If you are a saver, you may be too tight and miss out on the spontaneous, fun side of things. If you are the spender, you may have a tendency to over indulge and miss out on the future. You need a balance. So whether you are saving or spending you need to understand the impact of the decision you are making.

Since I am the saver type, my impact goes to what am I giving up by saving too much. Am I missing out on some fun with my family, friends, or an opportunity to give because I am so focused on saving. These are real and we have to measure and be careful. I’m not suggesting that you completely loosen up but where can you set some money aside for fun and indulgence and loosen up a bit to enjoy some moments in this life here or possibly even bless someone that is in need.

If you the spender, you have to take some time to way the decision of the spending. This is where a budget is a critical tool for the spender. Paychecks are not to be spent when they come in but assigned. When you get paid, you take that paycheck and you divide it up to the expenses for the month, some of which should include the ability to spend on some of those indulgences (once you are out of debt and have a fully funded emergency fund, until then you are focusing all spending towards your 4-walls and your debt). Now, when you want to buy something that is an indulgence or a nice-to-have, the question is what is the impact. For example, you want to buy a dog. Now problem, but now factor in, what is going to be the cost of food each month, how much money will you need for vet bills, how about toys and treats, etc. Think beyond the initial purchase of the dog, think about the monthly budget impact. Before you go make that purchase sit down and work out a budget to factor in the cost of that dog for the month and over time. Are you willing to sacrifice some other expenses to have that dog. I know that is a big purchase, but the same goes for anything. The first thought is do I have the money in my budget to buy this, then will this impact my budget the next few months.

If you start thinking about the impact of your decisions, your purchases, you will start to think differently about how you approach things and if you really should buy something. My rule in general, is if something is over $100, I’m going to take some time to step back and think about the impact. Do I really need this? Do I just want this? What is behind my desire? Then as the price goes up, I’m going to spend more time really thinking over the decision before I make that purchase. That could be a week, a month a year… All depends on the urgency and priority of the need.

What type of spender are you? I’d love to hear from you, DM on Instagram, FB or LinkedIn, let me know the type of spender you are and if you struggle with something I would love to know, help me tailor some future posts. The motorcycle is one of my decisions, but I've been working on a pool for the last 3 years, I had not idea how much time and money I would spend on a wall, a deck, landscaping... The list goes on. Do we enjoy it yes, but it is definitely more than anticipated.

God Bless!