Are there HARD TIMES ahead?

Have you read the paper? Listened to the radio? Heard it on the news? We're in for financially hard times ahead. It seems that the banking industry got pretty excited about loaning money - even to companies and people that didn't know if they could pay it back. And now we're all paying the price.

Now the first instinct may be to crawl into your warmest pajamas with a big cup of hot cocoa and hunker down for a long economic slumber. Or go into complete denial - turn off the news, and set out for a relaxing afternoon of shopping for the latest fashions - a tactic that will definitely make the situation worse.

If money's tight and you're not sure if you can make ends meet, what do you do? Find a way to make more money - right? Surprisingly, that is not always the answer.

Write down what you spend

Our vagueness about money can be one of the main reasons we have such a hard time holding on to it. I meet plenty of people who say they don't have enough, or they need to make more, but when I ask them details - like "what do you spend money on from week to week" they really don't know. We tend to gauge how well things are going financially by how much money is left in our checking account (or pocket) by the day before payday. If you want to make it through a financially hard time, that is the most important time to take a good look at what's going on with your money. Keep a notebook and write down everything you spend for a week. Or ask for a receipt for everything you buy and throw them in a shoe box at the end of the day. After one week take a good look at where it all goes. You may be surprised.

Pay Yourself First

You're your most important bill. If you wait until you've paid your other bills, bought groceries and gasoline, and had your fun - movies, dinner, a little mall browsing - chances are there will be nothing left. But pay yourself first. Put a little aside in a place where you won't have incentive to touch it - saving account, mutual fund, cookie jar - whatever works for you. Even people who say, "I'm broke - I can't save," are surprised that they're still eating at the end of the week.

Emotional Spending

For many people saving for a rainy day always seems to be one of those forever unattainable New Year's resolutions. We have the best intentions but it never seems to happen. And for some, we just don't know why. Many people don't realize how much of their spending is due to their emotions. Even if you don't make a lot or spend a lot, you may be surprised at the amount of extra money that may be slipping through your fingers and why.

A Way to Stroke Your Ego

A few months ago I was working at a church and I met an eleven-year-old girl with a cell phone. I asked her where she got it, and she said her dad gave it to her. I recognized the brand and knew that that phone cost $500. I was trying to remember the level of responsibility I was granted at age eleven.

One of the easiest ways to justify spending money is to spend it on our kids. How many times have we gone out shopping, found toys or clothes or candy or ice cream and thought, "I'm buying it for the kids, so it's okay." But do your kids really need it, or even want it? Many times we're buying these things to fill a need within ourselves to feel like we're a good provider. However, if you're spending money you don't have, you're just hurting your kids in the long run. And even if you can afford the purchase, think about whether this is something your kids have to have.

A Way to Feel Fulfilled

For some people, having THINGS provides security that their life in other ways cannot. When we hear about movie stars who have seventeen cars, and thousands of pairs of shoes, it gives the impression that they are successful and secure. I hear young people talk about their DVD collection or the 100 pair of Jordan's they own - it gives an illusion of security. Only people that can afford it would have all that stuff - right?

Well, many people who buy beyond their means are trying to compensate for other areas in which they lack. Not happy in a job or a relationship, just losing a loved one or feeling lonely, even coming home to a messy house can trigger a shopping spree.

If you're constantly buying clothes, shoes, electronic equipment, DVD's that you don't need, or worse yet, that you can't afford, think about what those things mean to you and why you feel you have to have them.

If you're out shopping and you see something that you can't live without, decide to buy it. Tell yourself you're going to buy it - tomorrow. Walk away with the full intention of coming back the next day to buy that item. That 24 hour wait can make the difference between an impulsive buy and a necessity.

A Way to Numb Yourself

We all have found ways to make ourselves feel better when we're feeling down. Many of us have found ways to numb ourselves so we don't have to feel bad at all (for the short term). Drinking alcohol and taking drugs are commonly heard of tactics some people use - and we all know about the dangerous side effects that can go along with it. Eating is also a common way many people suppress bad feelings. Nothing can pick you up like a hot fudge sundae!

Shopping can also be a great pick me up. If you come home to a depressing stack of bills in the mail, why not buy a nice new skirt to make yourself feel better? Shopping can frequently be used as a way to avoid dealing with issues in your life. A way numb out the bad feelings and only let in the good ones. Unfortunately, when we come back home we still have that stack of bills to deal with.

If you're having problems saving your money, don't be vague about it. Spend some time thinking about why you spend the way you do. How does it make you feel? And how would changes really impact your financial future? The answer isn't always just to make more money.

Start Money Smart offers workshops for adults, parents, and teenagers that address these and other topics regarding financial literacy. Check out our website for more information.