If You Don't Have the Money, You Don’t Buy It.

Some of you know that I am a born and bred Dutchman. The Dutch are known for many things, good and bad. Together with the Scots, we seem to have the “reputation” of being stingy, penny pinchers and hagglers.

There is truth in that, I must say, but that’s not the point. A fact is, that –generally- the Dutch have a pretty good money management attitude, and not often get into financial strife. I can vividly remember my mum’s standard answer to my childhood and teenage pleas for more toys and “goodies”:” if you haven’t got the money to buy what you want, you either go work for it, or you don’t buy it!” Simple. Effective.

From a stress and work-life balance point of view this is a healthy way of looking at things. If you don’t have the money, you just don’t buy it (the one major exception for many in the Netherlands being a home). This is especially poignant when I read in the paper that –I quote-

“AUSTRALIANS [but not limited to Aussies] are facing unprecedented levels of financial stress from cost of living rises, with one-in-four dipping into savings or going into debt to maintain their lifestyles.”

Not so long ago I read another article, in which was pointed out, that “things” that 15 years ago were considered a luxury, nowadays form part of the “got to have-list”. The BIGGER house, the second or third car –of a more expensive make as well, the so-manieth computer in the house with superfast –expensive- broadband connection, the BIG widescreen television, the newest mobile phone, the game console(s), the holidays, the reverse cycle air conditioner, etc.

Maintaining that lifestyle has indeed become a stressful chain of events. People buy their lifestyle on credit, on lay-by, on “50 months interest free”, on borrowed money, or from essential savings money that should really be kept for emergencies.
Not that all this in inherently bad or wrong; it definitely is NOT financially healthy behaviour, though.

We can only keep that cycle up for so long. At some point something has got to give, and it’s usually not the money….. We can only work SO hard, economise SO much. So it has to be our lifestyle, or at least our expectations of [whatever is] lifestyle.

On television I saw a couple having a hard time because they were way in arrears with paying their mortgage. She was crying, he didn’t say much (which said it all). Now that’s a sad thing, obviously. But. Put it in perspective, though: he was driving a big Ute (or truck, bakkie, or pickup, depending on where you live); fairly new, and costing at least $40,000+ to own. She drove a smaller Kia. The house was a beautiful 4 bedroom, again fairly new, dwelling, with a nice garden, in a good neighbourhood. Price must be in the regions of $450,000 to $500,000. The interior of the place looked good, too, and yes, a huge chunk of a wall was taken up by a –at least- 50” wide screen television. There were more nice things to be spotted. The gist of the report on television was how Aussies are “doing it tough” at the moment, and this couple –in their early 20’s- was an example.

That jars in my brain, somewhere. I sincerely feel for the couple, as they obviously perceive great stress. On the other hand, there is nothing wrong –especially at that young age- with buying a $300,000 to $400,000 3-bedroom house, which saves you at least $7,000 to $10,000 per annum in interest payments. And what about renting?? Downsizing in vehicles isn’t failure either, and could make for easier repayments or owning them outright. The television? Well, let’s not go there. My conservative guess was that at least $15,000 to $20,000 per annum could be saved by lifestyle changes, which would GREATLY reduce stress levels. A fair chunk of money.

I really like keeping things simple. The simpler you can perceive life, the less difficult is becomes to make clear and stress-free decisions. I also like a healthy financial attitude, as that will ensure stress-free living, and happy retirement. It all forms part of what I call my “Knowareness” principles; the combination of knowing and awareness that assists you in maintaining perspective.

Simplifying life and cutting back on spending until your financial situation clears up isn’t the end of the world. The stupidest things to do when making financial decisions is 1) using borrowed money to do it with, and 2) using “keeping up with the Joneses” as your decision making criteria.

The solution to get out and stay out of these kinds of stresses and stressful lifestyles? Well, there are multiple, but here are two to start off with:

• If you haven’t got the money, don’t buy it. Wait until you do have it. Delayed gratification is the term for this.
• From whatever money you make (weekly, monthly), win, find, save, etc: put 10% aside in an “untouchable” account, ongoing. The only purpose of that money is to make you more. There is a bigger strategy to this, but start off with saving 10 percent on the highest internet savings account you can find, and then watch your wealth grow, day by day.

I realise I will be kicking the shins of many a retailer and banker, but we’re talking about your financial future, here, and about your lifestyle and lifestyle stresses. Spending beyond your limits is a killer, and many people seem to consider it an accepted one….

Be the first to wake up. It’s worth it.