Honesty: Truly, the Best Policy
Wow...I've been out for a while. I guess that's what trying to fly to Denver and back will do to a girl. I haven't wasted my time, though. I've been thinking about this last year, and next year, particularly financially, and I have some reflections to share.
I lie to myself a lot. I don't do it on purpose, but I end up doing it nonetheless. I tell myself that everything is fine when it is not. I tell myself that I'll figure out a way to work things out when reality is that the situation just sucks. Mostly, I try to protect myself from the frustration and pain of life, because I don't want to have to feel it. If I feel it, I have to deal with it, and I either don't want to deal with it, or I fear that it will destroy me. Thus, my active sense of self-preservation keeps me dishonest.
Financially, what I have come to call "self-honesty" is important. If a person can't make ends meet, or has wracked up so much debt there's no way they can make monthly payments, or needs to find a way to borrow money for a medical procedure, the first step to finding a solution is for them to be honest with themselves. In solving the problem, "I can't pay the bills this month," takes a huge step beyond, "Well, maybe if I don't eat for three weeks..." As the leader of the AA group the met at the school I used to work at would say, "You can't solve a problem you just KNOW you don't have!"
Seven Steps to Financial Self-Honesty
1. Work with specific numbers.
This keeps you honest because you have a quantifiable way to measure your success. Either you spend less than $25 a week on eating out, or you don't. There aren't a lot of ways around it.
2. Talk to other people.
Other people are a great resource for financial accountability. If I tell my friend that I'm not going to buy any tech gadgets because my honeymoon's coming up and I want to save for it, she will be sure to notice the printer/scanner/fax combo and ask me about it.
3. Really balance your checkbook.
It's easy to let the bank do all the work, to write down their numbers when you get the statement at the end of the month and call it good. If, however, you go through and crunch the numbers yourself, you have the undeniable data in front of you for how much you spent on everything, from the cinnamon rolls for the office party to the 7 "special" dinners you had with your significant other.
4. Look at your paychecks.
Direct deposit means that many of us never actually see the piece of paper with the numbers on it that indicate how much we get paid. It's easy to stick those envelopes in the "tax" pile and forget about them. Seeing it all in black and white, though, makes it easier to know how much you really have.
5. Make predictions and see how well you do.
At the beginning of a month, write down how much you think you'll spend on differen things: food, meals out, techno toys, etc. Keep your receipts, and add up your totals at the end of the month. If you're close, you tend to be honest with yourself about what you need and want. If you're way off, it's possible you were conveniently "forgetting" how much you spend in a particular category when you were making your predictions.
6. Evaluate how much you save.
I'm a careful saver, and yet I find that I often think I have more money in my savings account than I really do. I forget about the $100 deposit I put on my bridesmaid's activities and the end tables I had to buy because they matched my coffee table. When I intentionally look up my savings account once a week, I tend to remember more accurately.
7. Write it down.
Maybe you noticed that several of these suggestions involve actually taking out a pen and writing numbers down. This is because writing helps us remember. It helps some more than others, but it helps us all at least a little. When we write down how much we spend, or want to spend, or how much we make in a month, it is harder for us to deceive ourselves because the real numbers are more ingrained in our minds.