“If only I had more money”
How many times have you told yourself this?
If only you had a little more, things would be straight. You’d pay down your debt, catch up on all your bills, and even save a little.
With more money your financial worries would fade into oblivion.
But consider this:
“Mo’ Money, Mo’ Problems”
On a summer day, David Lee Edwards entered a Clark’s Pump ‘n Shop and laid down $7 for lottery tickets. Later that evening he became the winner of a $27 million dollar lottery fortune. By all accounts he should have been in financial heaven. Yet, high living and financial blunders found him five years later bankrupt, living in a storage unit.
Terrell Owens was once one of the brashest and most talented wide receivers in the NFL. With a reported $70 million in earnings during his football career, Owens future looked bright. But many bad money decisions and four baby mama dramas later, Owens finds himself out of work, out of money, and in what he describes as “hell.”
Bad Habits Now = Bad Habits Later
But before we criticize lottery winners, athletes, and other high earners, perhaps we should take a look at our own money behaviors.
While we might not have mismanaged millions like Allen Iverson, Mike Tyson or MC Hammer, many of us haven’t done the best when more money has found its way into our lives.
How many of us, for instance, still find ourselves in debt despite receiving pay raises, finding better paying jobs, or coming into huge IRS tax refunds?
The simple fact is that bad habits and poor money management skills don’t suddenly disappear when more money enters the picture.
They simply get amplified, often leaving us no better off.
How Do We Keep From Falling Into the “More Money” Trap?
Now let’s be crystal clear. Increasing income is vital to wealth building, but only if we learn how to manage the money we already have. Additional income can become a blessing instead of a curse.
The key is to simply set your bad money habits straight before you come into more cash.
First and foremost, understand what you spend your money on. Truth be told, most of us have no idea where our money goes. Track your spending to find the money pits, because these money drains only get larger as your income grows.
Second and more importantly, take a hard long look at why you spend money. Psychological forces drive our money habits, and these same forces can create havoc when more money comes through the door.
Do you spend to feel better about yourself? Are you looking to impress others? If so, that late model Honda Accord morphs into the late model Mercedes money pit as your income grows.
Does shopping provide a form of “retail therapy” for bad days at the office or drawn out fights with the spouse? If so, after the paycheck starts expanding, those $100 shopping trips become $400 shopping nightmares.
Do you have a “sense of entitlement?” Heck, you’ve worked hard and deserve every luxury you purchase. If that’s driving your spending then you’ll likely experience super-sized bills when your income improves.
Yes, it takes an honest assessment to identify our less than pretty spending motivations. But once we uncover the warts and blemishes, we’re in a better position to master our money.
As a result, when we do become blessed with more money, we’ll be equipped to make the most of it.
BMWK, how do you avoid the “More Money” trap?