The city of Cape Town Improvement District recently launched a public safety campaign aimed at tourists and safety within the city center. The slogan is “Stash it, don’t flash it”. I love it though as it is hugely relevant to finances in general and I’ve decided to piggy-back on the idea with my own campaign!
So what do I mean with this slogan? Simply put, stash your money away in investments instead of flashing it around in the form of label-brands, jewellery, cars and “things”.
Seems simple enough but let’s look at how this simple slogan can literally change your life in terms of money.
Pitfalls of peer pressure
Unless you’re living under a rock you will most probably have first-hand experiences of not fitting in with the right crowd. Or maybe you’ve always been in the popular crowd but then you must sure know the pressures of keeping up.
We live in a crazy world where we always compare ourselves to others. We want what the celebs are marketing and what others have, and we feel the need to look a certain way, hang out at certain places and do what the “right crowd” is doing so that we can also be cool and hip.
But where does this all lead to? Well, the reality is that it all means nothing really. Life goes on and people move on. You might waste thousands of rands in university just trying to keep up the appearances of being cool and hanging out with the right people, but soon after you leave you might lose friendships, you may get married, start a job, etc and live moves on. You may have gotten value from the friendships and experiences, but did you really get value for your money when you think about how much you spent on unless “stuff”?
Perhaps you currently working and have bought a flashy car to impress your colleagues; but is it worth it? What do you get in return besides debt, stress and high expenses?
Everyone is at a different position when it comes to money. Right now some of your friends may have more or less money than you; they may have more or less debt than you and their families may or may not be better off than you. So if we are all in a different financial position how is it possible to compare ourselves to each other and how can we possibly compete in the “fashion” and “coolness” arenas when we are clearly all at different financial points?
It’s easy… peer pressure leads us to want more, do more and inevitable spend money that we don’t have. Getting into debt simply to fit in is absolutely not worth it! This will ruin your life financially going forward as you will firstly have a mindset that debt is okay, you will also feel that you need to spend money to fit in, and later on in life you will most probably have huge financial stress that will affect your relationship and family.
The solution is really easy to know but really hard to live. Simply put…
“Spend less money than you earn”
See where your money goes
Why not try an experiment for the next 30 days and see where your money is going. Write down everything you spend, every last cent and simply note what it is for. And then at the end of the month sum up all the expenses and categories them into things such as groceries, clubbing, clothes, books, school fees, transport, etc
At the same time mark all the expenses that were made using debt (ether a credit card, store card or personal loan). And now think about the expenses the past month and decide what was important and what was not. How much value are you getting from the various expenses and were they worth it?
Learn to say “no!”
Your expenses may scare you, or perhaps it’s not so bad. Either way, you don’t need to completely stop spending money and become a hermit. You can simply learn to say “no” to some things.
The best way to decide what you can afford or not is to start with a budget. If you earn a salary each month (or get some sort of income) then it is quite simple and you can follow these 5 steps to start a budget. If however you receive money on an adhoc basis (with no reliable dates that you can plan towards) then it is slightly harder. There are several free apps that can help you, and you can also use Excel or even just a notepad. The trick to budgets is to constantly keep track of your spending! You need to know if you are within the limits you set.
If you know what you budgeted for something, and you know how much you have spent, then it is much easier to make a decision and say “no” on the occasions when it’s beyond your budget.
My partner struggles to say no to things because of budget-constraints but I really don’t mind telling someone I cannot afford something. It’s life and sometimes you just need to look after yourself and your own well-being. You can make it up to your friends at another time.
Don’t let other people dictate to you how you spend your money. Spend the time and effort to understand how much you have and what you can afford, and then be self-disciplined to stick within your own boundaries.
Learning to do this will have a huge impact on your finances going forward and you will really be able to take charge of your money! This is a great habit to improve your financial health.
Don’t be afraid to say “no”!