Most of us have a spending problem.

Saving money can be hard.  In fact, I wrote in a piece recently that saving is one of the most difficult human challenges.  The pull of instant gratification is just so strong.  We want what we want, and we want it now. A recent study in the US showed that 76% of Americans live paycheck to paycheck.  That’s a crazy statistic.  That means that most Americans don’t have the available funds to fix a broken car, book an urgent trip or look after themselves if they (or their family) fall sick.  And the reason for this is that Americans have a major spending problem.

And Americans are not alone.  I said just the other day to a group of people that here in Cayman people don’t generally have an income problem, but we do have a spending problem.  And most don’t recognize it because it’s so normalized here.  I would say that 90% of people I speak to will tell me something along the lines of ‘we are not extravagant people, we don’t live fancy lives’.  Yet, despite earning well, most people don’t have a lot in the way of assets to show for it.  And assets (think investment accounts, your house, maybe a business) are the foundation of your financial security.  You need to convert your income into assets in order to build and sustain wealth.

saving money
saving money

What excessive spending really means is that we are working way more years (think decades more) than we have to, simply because we are consuming huge amounts of stuff.  Stuff that in general is not adding any meaning or real happiness to our lives.  And it’s actually causing a massive amount of stress and in some cases serious health issues.

The key thing with spending is not necessarily to budget (budgeting doesn’t work for most people) but it’s about being more thoughtful about what you actually spend money on.  This is how we can live a healthier and wealthier life and be free to retire from mandatory work much earlier.  It’s not to say that when you retire you won’t still want to make money, but it’s just that you can have way more fun doing it, because the stress of having to do it is gone.

Do you know this makes sense, but still find yourself in the store with things in your hand that you don't need?  Check out this article for some great tips on how to cut back.

Got some cash in the bank, but not sure what on earth to do next?  Drop me a line, and let's chat.