Monday, May 18, 2009

Insulted by the truth

More and more I'm reading about my generation and our attitudes toward money.

There are exceptions, but for the most part, my generation is described as "buy now, pay later", as expecting to begin life with everything our parents have worked years to attain, as thinking no big deal about credit cards or debt.

We're considered to be selfish, as expecting things to be handed to us. The most popular explanation for this mindset is the fact that we've grown up our entire lives in relatively prosperous times and this recession is the first time we've ever had to stop and really examine where our money comes from, and where it is going to.

I know exceptions - Holly is an exception - but for the most part, it pains me to realise that I am the rule.

I was watching something recently - I can't even remember what it was now but one part of it really struck a nerve - it was asking kids what they wanted to do and one kid said he was waiting for his parents to die so he could sell their business and spend his life on a beach somewhere. Now, I'm not exactly like that, but there are absolutely elements of that attitude within me and that freaks me right out.

I know debt isn't the best position to be in - and yet from the age of 17 I have been in it - that's almost ten years I have been in debt. Each month, more and more of my money is spent paying off cards. Then I have to go back to using those cards in order to get through the second half of the month. Each year, in one way or another, my debt manages to increase, bit by bit. I pay one thing off, and then I go and extend something else.

It's painful. Extremely painful.

So with this knowledge - the knowledge that my attitude toward money is exactly the kind of attitude that got us into this recession in the first place, and the knowledge that I don't like my attitude and I think that yes, I am bloody selfish - I'm trying a new tactic.

I've changed the way I'm handling my money. Right now I have 4 accounts. It might sound a little overkill, but each one serves a specific purpose, and for me, part of getting to grips with this problem I have, is compartmentalising my entire approach to money - rather than just having one great lump sum sitting there tempting me at the beginning of the month and reducing at seemingly impossible speeds to make me broke again, only a couple of weeks later.

The first, and most important account is my savings account. One thing almost every article I've read agrees on is that my generation don't save. I'm not planning to touch this account unless it's an absolute emergency - and even then, I'd be loathe to get into it. I have a goal for these savings so with luck they'll get bigger, which is something they've never actually done before. The graduation gift my parents gave me has acted as 'seed' money for this account. I don't want to spend that money on anything less than something that's worth the 3 years effort it rewards, so I think my chances of keeping that money in there are high.

The second account is the 'holding account' - this is where my salary goes, where rent and other bills are paid from and what pays my other accounts.

The third account is the 'everyday account' - this is the one I'm allowed to use. I am allowing myself a (rather small) amount each week which must cover groceries, entertainment and transport. The idea being that when it's gone, I don't get any more until the next week. This isn't the end of the world because at most I'll only have to wait 7 days for more money - unlike the methods of the past where sometimes my salary mysteriously disappears in 2-3 weeks and I've got to wait another 2-3, dirt poor, looking forward to that day when the big lump sum arrives and I can repeat the entire process again.

The forth account is a temporary one. It's there while I work out this whole budgeting and living-within-my-means thing once and for all. In it, at the beginning of the month I put in a couple hundred dollars. This is enough so that I can cover emergencies - pay for taxis out of awkward situations, or cover any essentials that are just too big for the everyday account. The difference between this and the everyday account is that while I can do anything I want to with the everyday account, I must be able to justify every penny coming out of this account. I must be able to say "I needed to spend that money" - and actually mean it. It can't just go on a book, or the first season of Star Trek TOS (both of which it was tempted with yesterday) it has to be something at least semi-important. The idea of this account is that I will eventually get to a point where it's not needed at all, and the money can actually just go straight into my savings account instead. This account also works on the 'when it's gone, it's gone' principle, again, in a bid to make sure I only spend it on things I actually need.

The whole idea is to go back to basics - instead of constantly buying more food, I start using the ridiculous amount I have in my cupboard. Instead of buying a new book I read something out of my own bookshelf - much of which I've never actually read anyway. I'm not trying to tell myself 'no' or set useless rules about not buying Coke or not going to movies, I'm simply trying to make myself live within my means.

It may take a few months to actually get rolling but I think this might actually work. I know for a fact I can live within my means - I'm just extremely unaccustomed to having to do so.

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