To be human is to make excuses sometimes. It’s hard to face difficulties head on, and our brains are wired to protect us from risk so it’s natural to attempt to gain little relief by making an excuse. But when it comes to personal finance, the small dose of relief you get from making an excuse is inevitably short-lived. Why? Because excuses hold you back from addressing the root of your problems, which in turn stops you from implementing actual solutions. Though it often feels challenging to get this process started, it feels great to take strides toward fixing your personal finances—going above and beyond “band-aid” excuses that make it easy to keep living in denial. Here are 5 common money excuses that can derail your financial progress.
I Can Always Save For Retirement Later
It’s all too easy to separate “now” and “later” in your mind. Well, I need this money now, you may think. I can always worry about retirement as I get closer to it. The problem with this line of thinking is that the best long-term financial strategies capitalize on compound interest.
Compound interest means the money you invest in a retirement fund collects interest, and then that money collects more interest. Basically, your interest racks up interest so that your money is working for you (and not the other way around). This is why it’s so important to start saving as early as possible.
Business Insider illustrates compound interest in action with two example consumers: Susan and Bill. Susan saves $5,000 annually between the ages of 25 and 25. Bill saves $5,000 per year between the ages of 35 and 65. Though Bill saves for 30 years compared to Susan’s 10, Susan ends up with more money come retirement time—over $60,000 more, in fact.
Of course, it’s optimal to save consistently throughout your career starting early so you can reap the biggest reward of compounding interest.
To overcome this excuse, start putting something into a retirement account now. It doesn’t have to be a lot. You can contribute to your 401(k) through your employer or open an IRA. Saving something for retirement early on will establish a habit of investing long-term. Over time, you can increase your contributions and build a solid nest egg.
I’ll Start Budgeting Next Week, Month, Year, etc.
One of the easiest excuses to make is that we simply don’t have time to sit down and sort through our financial situation. It’s true that most of us are busy with work, school, family obligations, hobbies, traveling, etc. But, when you really think about it, it’s fairly easy to take 20-30 minutes a month to devote to planning and managing your finances. You probably spend this same amount of time scrolling through social media or watching shows on Netflix.
Start by blocking off a half-hour within the next week. Make “a date” with yourself to get acquainted with your finances. Put it in your calendar. Follow through. Then make this a recurring event, either weekly, biweekly or monthly. You should also get your partner and household involved in the family budget as well. You can use budgeting tools and software like Mint, Personal Capital, or YNAB to help.
I have too much debt to really make a dent in it.
Debt is one of the most common money excuses that saddle people down and prevent them from doing more with their money. At some point, it’s easy to slip into the mindset that you owe so much money and nothing you do will really make a dent. It’s important to avoid self-defeating thoughts before you even explore the debt relief options available to you.
For instance, a heavy-duty solution like debt settlement may help you. Or you may be able to utilize the snowball or avalanche method to pay off your debt strategically. Another option I’ve used for credit cards was doing a balance transfer to temporarily get rid of a high interest rate.
There’s no such thing as “too much” debt. It’s all a matter of finding the most suitable option for your circumstances.
I Don’t Make Enough Money.
Feeling limited by your income? It’s helpful to think of savings goals and expenses in terms of percentages. No matter your income level, there are always cost-cutting measures to try: eating at home rather than in restaurants, eliminating pricey subscriptions, downgrading your phone plan, taking public transportation, etc. It’s less about how much you make and more about how you use it.
Also, keep in mind that you can increase your income with a side hustle or by picking up more hours at work. Brainstorm your interests and areas of experience to see what you can do to earn extra money. It helps to get on a schedule so you know how much time you can dedicate to extra income opportunities. Use your budget to stay on track with spending so when you make extra money, it goes to something valuable and won’t just get wasted.
I’m Just No Good With Money
It’s sad that this is one of the top money excuses I hear from people. If you feel like throwing in the towel, remember that financial literacy is an ongoing process—not a destination. The only way you’ll get better with money is through experience and being open to learning new tricks and tips. Just like you should set aside regular time for budgeting, set aside time to consume relevant personal finance content. You can listen to podcasts, read articles on the internet, watch YouTube videos, etc. Also, personal finance is personal so your journey will look different from others and that’s okay.
Making any of these excuses won’t fix your personal finances. Only developing solid money habits will do that. So, have any of these top money excuses been holding you back? Which ones are you going to get rid of ASAP?