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Once upon a time, money slipped through my fingers like water.
I was newly independent and actually earning my own money for the first time. The feeling of freedom was intoxicating. The freedom of spending money was even more intoxicating. I was young, single, almost no expenses and lots of money to spend!
As soon as I got paid, I’d start buying anything and everything that caught my eye. Sure, I thought I was frugal. I only bought cheap stuff. $5 DVDs at Walmart by the dozen. A cheap surround sound system that sounded like crap. Bargain bin video games that were in the bargain bin for a reason. And it was all stuff that I could keep – so I didn’t feel like I was throwing my money away. The notion of buying experiences, not junk had never occurred to me. By the time my next paycheck would roll in, I’d have nothing left over from the first.
Cash is King
Each paycheck, I’d cash out my entire check. After covering the very few expenses I had at the time, the rest was spending money. When the cash was gone, the spending stopped. And this worked – except it never occurred to me to stash some of the money from the top of my paychecks. I’m fortunate that I didn’t have any emergencies back then because I definitely didn’t have an emergency fund!
Related: Emergency Fund 101: Why You Need One
My only saving grace is that I didn’t take on debt. I had been taught that debt was bad, so I never let that be an option. Growing up, I had been taught that credit cards were dangerous. So at the time, I didn’t have one. Which is a good thing, since I wouldn’t have known how to use one responsibly. I only spent cash, partly because I thought that this was a great way to budget my spending.
The Almost Wake-up Call
At one point, I almost had a wake-up call. I realized I was spending money. I even remember commenting to a friend that $20 dollar bills were dangerous for me. Unlike $50’s or $100’s, $20’s were small enough that I didn’t feel like I was spending a huge amount. However, they were large enough that spending two or three made a dent awful fast. However, I hit snooze on that alarm and didn’t let that realization change my spending habit… yet.
This had been my first year of real earnings. Everything was fun and games until I got my W-2 the following January. I remember looking at my total earnings and being shocked. There were five digits there (before the decimal)! I had never seen five digits associated with my name before! And then it hit me. Where did that money go?!? And then it really hit me. If I hadn’t spent that money, I could have had at least four digits, if not five digits in my bank account! Overnight, my impulse buying was cured. In fact, I probably knee-jerked too far in the opposite direction. For quite some time, I refused to spend money on anything at all and was probably a little miserly for a while.
Finding the Sweet Spot
I’ve finally found a happy medium (I think). Part of my problem was not having a budget. I didn’t think I needed one since I barely had any expenses. Even after I was cured of my impulse buying, I still didn’t think I needed a budget. However, without a budget, I didn’t have a game plan. When it came to my discretionary spending, I’d mostly be tight-fisted. Occasionally, I’d go on a random splurge.
Perhaps more importantly, the money I was saving didn’t have a purpose. I never stopped to figure out the ‘why’ of personal finance. I was becoming a money hoarder. All that mattered to me was that my bank account was getting bigger and bigger. And I’m not saying there’s anything wrong with a big bank account, but accumulating money just for the sake of accumulating money is greed and is a dangerous place to be.
Related: How To Make a Budget In 3 Easy Steps
Developing a healthy approach to money took time. I finally did start budgeting. And I finally started thinking about the purpose of money. I now do allocate money for ‘fun’ in my budget. But I also save for things like emergencies and retirement. The money I save has a purpose and the money I spend is spent intentionally.