Trade The Journey

Trade The Journey

Slippery Slope: Spending Dilemmas.

I can’t say for sure what’s at the root of my reckless spending. Could it be the small advance I saw my investment make? Which is now gone.

Could it be the amount I saved when receiving my paycheck? I had to make a withdrawal from my savings account to stay afloat.

Could it be the increase in pay I will see because I billed more hours for my business? Which looks less like a sure thing each day.

I don’t know. Could be a combination of all three.

For a while, I was sticking to my budget and avoiding unnecessary expenditures. We don’t live in a vacuum so the pressure to spend can be ever-present. It was tough seeing others enjoy their purchases as they made spending decisions without much thought.

Here I was at lunch, eating a peanut butter and jelly sandwich while my colleague was devouring his weekly calzone. So for the typical reasons, I decided to make a couple of food purchases during lunch this past week. It wasn’t the cause of my reckless spending but it sure didn’t help.

I was also bored. One of the hardest aspects of money management to grasp is the thought of the future. Each day you’re denying yourself a purchase or experience that you see others enjoying freely. And the worst part is that you know you’d enjoy it as well.

After so much self-denial a break in self-discipline is bound to occur. Maybe for some, the break never happens but for me its a matter of when. The length of time I’m able to completely stick to my budget varies.

So the question becomes, How can I stick to my budget for the long term?

What can I do to ensure that I don’t fall into the trap? One part of my spending plan that can cause harm to a fluctuating income is automatic withdrawal. The automatic withdrawals can prove to be lethal if the funds aren’t there.

Unfortunately or fortunately, my savings account is also an overdraft protection account for my checking. This means that an overdraft in my checking account will initiate a transfer from my savings account. Doing it this way will help you avoid the $35 fee.

However, the bank will still charge you for moving money from your savings to checking account. Bank of America I must say has been helpful in most situations by removing that fee.

I digress.

As I reflect, I think that the real issue is my lack of a detailed plan. The part of the plan that details your tactics for your weaknesses. Like overconfidence after a good trade or well-executed spending plan. After reading books about money management and trader psychology by Van Tharp, I have learned that there is no victim.

Only an accomplice and perpetrator. And they are both me. So for this week, I will give myself a D.

I gave myself a D because I faltered on my plan and failed to capitalize on the recognition. Reading Van Tharp’s book helped me understand two things: Its always your fault even if it isn’t and the thoroughness of your system/plan will determine your success.

It’s back to the college reading list for me, as I revisit my systems thinking books. As you read this, you may think I’m overcomplicating this. A system? Plan?

“Just stop spending money and develop a better budget”

That’s part of the solution but for financial success to work for me. I have to develop a plan that not only covers my finance situation but my professional as well.

Moving forward, capital (money) preservation will become of extreme importance as I risk a comfortable percentage of it to earn a better return.

Thoughts? Corrections? Opinions?

Leave a Comment

Your email address will not be published. Required fields are marked *