What’s a budget killer? How about your TV bill, for example?
A savings of $90 per month may seem like nothing, especially when you can “afford” the expense. However, how many times have you wondered at the end of a month why you don’t have the money you’d like to do something?
The problem? It’s our behavior. We’re guilty of short-term thinking, which hurts our financial livelihoods in the long run. We don’t stop to realize that aimless spending on items that return no value holds us back. Aimless spending may make us feel good; maybe that’s why we do it. It allows us to keep up with the Joneses. But the sad result is that aimless spending holds us back from accomplishing the things we really want in life.
Spend on What Returns Value
One way to get into the debt-free mindset is to only spend money on items that return value. Any other spending holds you back. You do need to have balance, of course, but a careful analysis is needed to make sure your spending is on things that provide value.
Say you want to buy a new home in the next year. By analyzing your budget, you might discover two significant budget killers that are holding you back from that goal – your cell phone and TV subscriptions. At a total of $190 per month, this counts as a budget killer. If you were to switch to a cheap cell phone plan and get rid of the pay TV subscription, the extra savings will go towards your house fund each month.
Every situation is different, but the value aspect is just as important. If you’re paying off debt, for example, the value in cutting is debt freedom. That should be motivation enough.
The Purpose of Cord Cutting
When you’re streamlining a budget, keep one clear goal in mind – financial independence. Financial independence means lots of things to different people. It might mean the ability to retire in your 60s and travel around the world. For some it may mean early retirement or starting a business.
We can all be guilty of having budget killers. It pays, literally and figuratively, to be cognizant of the value your spending creates so as to not be wasting money you shouldn’t be.