Immediate gratification is an unrelenting beast. I'll be the first to admit that I lack patience when it comes to wanting to reap the rewards of hard work. I'm also an only child, so I've been generally conditioned to feel like I'm special and deserve something now. My impulsive spending always boils down to food. Food that someone else cooks, more specifically. So many nights I want to say, "screw it," and order take-out because I just can't muster up the motivation to cook after work. But life is all about balance, deciding what you need right now and what you can temporarily forgo in order to be substantially wealthier later. While most of us have no problem finding this balance, here are some signs that immediate gratification may be hurting your finances.
You Have Credit Card Debt
While I’m sympathetic towards people who’ve had to pay for emergencies or basic necessities with credit cards, especially if they’re a low-wage earner, I am less sympathetic towards those who get themselves into debt by trying to buy a lifestyle they can’t afford. With interest rates hovering around 19.99%, it’s amazing how quickly your credit card balance can rise. If you owe more consumer debt than what’s in your bank account, you need to buckle down and get rid of it fast.
You Have to Ration Your Money at the End of the Month
I’m not going to lie, I’m occasionally guilty of this one. At the beginning of the month we mistakenly believe that we're rich. It's the start of a new budget, we can splurge a little, right? And then.. we suddenly have $100 left for the next ten days until next month's budget. This is a tough one because I think this also ties into treating yourself, which I do believe is healthy and necessary. You just have to make sure your balancing things out. What’s the solution? Track your spending.
Your Emotions Dictate Your Purchases
How do you know whether your emotions are dictating your purchases? You use the excuse of feeling crappy to treat yourself to something you don't really need, and you do this often. The most effective solution? Make a budget. If you hold yourself accountable to a plan for your money, you're more likely to put that purchase into perspective of what you can and can't afford for the rest of the month . The second best solution? Wait 24 hours and see if you still want it just as much as you did the day before.
You Have Less than a $1,000 in Your Emergency Fund
If you have enough money to eat out at restaurants or treat your friends to a round at the bar, you have enough money for a bigger emergency fund. Most personal finance experts recommend having an emergency fund of 3 – 6 months of expenses. Yes, it'll take some time to get there, but you need to make sure that you're putting a percentage of each paycheque towards building this up.
You Don’t Have Long-Term Financial Goals
Your goals may not look like my goals, and that’s to be expected. But everyone has short-term, medium and long-term goals. Is it to pay off your debt? Is it to buy a new car? Is it to retire with a certain net worth? You need to figure that out and make a practical action plan that’ll take you there. If you’re only living for the now, you may be putting your future in jeopardy.
Money Should Empower You, Not Worry You
Mastering delayed gratification is hard and will involve mistakes along the way. You have no excuse not to try. Sooner or later, others may come into your life that will be negatively impacted by your lack of financial planning. There are, however, simple strategies you can implement to make things easier on yourself. Once you have a budget, recognize your spending triggers and determine what financial goals are important to you, you’ll begin to feel confident about your finances. I promise that a wealthy, worry-free future will feel 1000x better than anything you purchase now.