Budgeting Blind Spots
We want to spend our money on things that are important to us. But the unfortunate reality is that on occasions the important things we want are not backed up by our financial ability to pay for them. This can be frustrating and it may well be that we eventually must spend beyond our means to acquire these things. The importance we place on certain expenses turns them into our budgeting blind spots. We take these expenses as necessary or fixed costs. One of my budgeting blind spots was a subscription to a financial news site. For me, this was a fixed cost that was an essential part of my budget. I had failed to realise that I had control over this cost as the subscription had become an essential part of my daily routine.
As parents, we may want to send our kids to the best private schools. We convince ourselves that this is a necessity. After all this about the future of our children, what could be more important? We say ‘it must be done’ and we willingly put ourselves in financial stress. Think about another scenario, buying a house in an upscale neighborhood with best schools or any other expense you take on without a second thought. The point here is that I am not denying that these are worth your money but rather the point is that these are choices. We may feel that there is no choice but to spend our money on these things but at the end of the day, you do have a choice.
You may be thinking how can I even consider not spending on the best education for our children, but what I am suggesting is that we at least entertain the notion that these are decisions that are well within our control. It is all about taking responsibility for our decisions. So why does this matter? Well, it matters because if you are struggling to take control of your financial situation then you first must take responsibility for your decisions. By all means, buy a house in the best neighborhood, send your kids to the best schools but always realize that these things have to be paid for from our limited resources. If you have the money to pay for them then there is no issue but if you are under financial stress then you are setting yourself up for hard times.
The reason I call these situations budgeting blind spots is that most people don’t consider these expenses when budgeting. Budgeting is about making tough decisions, decisions that have financial and emotional consequences. Always consider the importance of your decisions relative to other financial goals. This can be an emotional process choosing what is more important but taking control of our finances is emotional process forcing us to confront our decisions. Of course, money should be used for things that are important to us, that’s why we work but it does mean making some difficult choices, looking ahead at the big picture.