This is a guest blogging post by Julie Ali.
One of the main reasons that we fail to become financially literate is a lack of financial awareness; by this I mean the conscious understanding of why we spend money. Of course we have a rudimentary idea of why we spend money: we spend money to live – for food, shelter, apparel and work.
But do we really know the other motives for our spending? Why do we spend beyond these essential needs? I believe we spend to make ourselves feel good, to feel that we are acceptable by the peer group of our choice and to alleviate boredom. The fact is for most of us, much of life can be down right tedious, boring, horrible or cruel. Nothing takes the sting out of criticism by the boss or a day spent in the vacuity of mindless toil as a new purchase (at least for some of us).
Financial awareness is therefore the first step in gaining control of our spending. We know we are spending too much when we look at our accounts and see that we are not saving for retirement, debt retirement, our children’s education, the emergency fund and for the “just in case account”. I will talk about how you can fully fund these areas in later articles but in this starter article, I want to concentrate on becoming fully aware – conscious of each purchase that you make and how it relates to your financial survival.
By financial survival, I am not talking about making the bills each month, although for many of us, that is an area of difficulty each and every day. The economic survival of the working poor is beyond the abilities of this writer. I personally do not know how anyone on minimal wage can survive beyond the subsistence level. The audience I am targeting are the one income families, the middle income families and the just above the
subsistence level folks – like my typical Canadian family.
Why do I consider my family just above the subsistence level even though my husband and I are both university educated? I classify my family in this manner because we depend on my husband’s salary to pay for most of our bills. While I do work on a casual basis, I do not contribute significantly to the flow of cash into the family coffers. Our income is theoretically adequate or middle class but in practice, monthly payments for the house mortgage, utilities, property taxes, insurance and car related expenses
(gasoline, maintenance and repair) whittle down the fine log of each pay check until there is very little left.
If I unconsciously spend or allow the hemorrhage of money from our accounts to occur without applying a tourniquet every day, then I believe we would not be able to survive. I thus have to be financially aware of every purchase that we, as a family make and delay, disallow or diminish the size of said purchases.
How does one become financially aware? I think it starts with a list. I am going to discuss this technique mainly in terms of grocery shopping since this is the area that I am struggling to reduce. For example, if you are going grocery shopping, make a list of items that are missing in the pantry or are essential for the meals for the next week or so. I used to buy bulk items and do s major shopping trip once every two months but I have now decided to do a major shopping trip very infrequently. I find it is more efficient for our family, at least to shop frequently and well. There is less wastage since food does not sit and rot in the fridge and we eat fresh produce regularly. Once the list is made up we simply buy what is on the list. Sometimes, I will defer buying something on the list if I possibly can. Other times, I will see a good bargain and pick it up. However, the main point of this written list, is that it is a skeleton that you can flesh out if you want at the store.
A shopping list keeps me conscious of what I am buying when I am in the store. I do not go off on a tangent and pick up stuff we do not need. I stay away from cleaning products, fluffy towels, bath products and other clutter. We have enough clutter and many of these products are accessible at much cheaper prices in the many dollar stores that are proliferating like earthworms in a compost heap. If the shopping list is pared down by a decision to delay buying the item until another visit – then I consciously use the list as a tool to decrease costs. I will add the delayed item to the next shopping list and carry that list to the next shopping trip.
Of course, I have made a list of regular items that I tend to buy and I refer to it when I go shopping. I use a print out of this generic shopping list, check the items and number that I need and use it. I do a rough total with a small calculator that I carry everywhere I go. The ongoing tally of the bill serves to reinforce the conscious spending habit.
The only problem with this habit is that you may tend not to buy very much. A well stocked pantry is a useful tool in the battle against the slit wrists of financial suicide so a six month major shopping trip is an effective practice to start. This pantry should contain staples such as flour, sugar, baking items (chocolate chips, raisins, nuts, rolled oats, coconut etc), canned goods (tomato, chicken, mushroom soups, tomato, tomato paste, tuna, salmon etc), beans, noodles, foil, wraps, wax paper, toilet paper and other essentials that do not spoil. Thus the pantry becomes a defensive measure that prevents unconscious spending.
Finally, consciously spending does not mean that you eat tedious amounts of fibrous products. I am a bad cook. I can, however read a cookbook. I try different recipes and I am becoming a better cook. Learning to cook will be the best way to lower your grocery costs and maintain your conscious spending habit. I encourage all mothers to actually teach their children to cook and learn at the same time with them. A weekend day where the child prepares and serves a meal is an integral part of the process of teaching
independence – at least in the area of cooking that is. Children can easily learn how to make rice, soups, salads and small meals; the incentive of making a treat at the end of the culinary ordeal will surely rev up flagging engines and take them to the finish line where they proudly serve and critique their own efforts.
Of course, all this stuff – making a list, maintaining a pantry, cooking and teaching cooking – takes time. Do you have time? If you don’t have time, then make time. Get up earlier or go to bed later. Throw out the
television, cancel the newspaper subscription, decrease the hours you work and start to think. Is this the life that you want – mindless spending, earning and living? Or are you ready to carve out some time in your day for thinking about what your particular plant needs – more compost, more water, more sunshine or perhaps less of the above? Your particular plant – YOU – needs your attention. Other things such as the malling of life that is currently passing for an existence, the nattering of politicians as they bread the public pork chops to fry for their own BBQ, the screaming pace of traffic on our roads and the many genuine issues such as child poverty, the discarding of seniors into the trash heap and the ubiquitous flushing of the
toilet of the health care system – they can wait. You need to focus on you and become conscious of why you spend and how do you want to define your life. Is it by our society’s gold standard of a BMW or a fully lived life? It really is up to you.
Julie Ali loves to write and is a stay at home mom of two elementary school boys.