How are you Monitoring Your Budget When It’s Getting Even Easier to Spend?

How money is used has changed over time. Let me give you two examples.

Example #1: Once upon a time (in the 1930s) you either bought a house for cash or you borrowed at a low debt to value ratio (you paid in a lot more than you borrowed) with a short term-5 to 10 year note.  Back then you either paid off the remaining mortgage at the end of its term or had to find a way to refinance it. Refinancing was not easy. You see, back then, banks were not providing the types of loans they have today. Home loans were very restrictive with variable interest rates, short maturities and big down payments. That was the way it was done. Today there are 50 year mortgages and in some countries, 100 year mortgages. These are available because the lenders want to provide affordable house payments not because they think you’ll be in the house that long.

Example #2: Once upon a time checks were the common form of payment for immediate purchases. You paid for something and immediately that money was deducted from your checking account by virtue of the check you presented. Today checks are a vanishing mode of payment. Britain has put into regulations an end to checks. In 2018, the use of checks will be banned there.

How does today’s changing landscape of money use affect your control over money? Greatly. When once, paper money represented an ability to pay, the landscape has shifted. Today many forms of payment represent a promise to pay…later. That, itself, is a huge shift.

Let’s look at three newer forms of payment to see what the future is unfolding to make transactions easier. First we have the Bitcoin. It is a coin without intrinsic value. It fluctuates with the “Investing” public’s appetite for it. If you bought a coin for $3 and today it is worth $400, well then you made money on your bitcoin and you can buy a lot more with it than when you originally bought it. Of course if you bought you bought your coin for $1,200 and today it’s worth $400, well that’s a different story. Paper money is more stable and until the 1970s, in the U.S. was tied to the value of gold. Today it is tied to the good faith of the U.S. which includes inflation adjustments.

Another form of payment is found in the gaming world where kids can purchase their “pieces” and charge these pieces to a parent’s (usually) account. The purchase is now, it is justified later; voila, the instant gratification trigger starts earlier. This is not a healthy trend. Kids don’t know how to turn on and off their triggers to gratification or even care to like most adults can.

Finally, we have the mobile wallet. Apple recently announced its Apple Pay, a partnership with the big 3: Visa, MasterCard and American Express allowing for easier mobile transactions.  Your impulse buying just got easier…one click on the phone and that item, well, thanks to Amazon’s prime account, it’s already at your door.

With all this ease of purchase, how are you monitoring your budget? What can you do to keep control of your spending?

The 3 top things you can put in place for yourself are:

  1. Categorize your spending. Know what you spend your money on
  2. Set a limit to how much you spend on your categories.
  3. Monitor, track and tweak your actual spending to your budget using a robust and stable program, one that allows bank and credit card downloading to your program.

Spending may have gotten easier but staying in control needs your attention.

Leave a comment, let me how you control your spending in an ever more indirect culture of using money. What works, what doesn’t? I’d love to hear from you.



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