I read an article a while back about the annual spending habits of Americans. The statistics were fascinating. I have not verified the numbers recently but the original source was legit. The current economic conditions may have put a damper on spending but I doubt the big spending trend will ever die.
Here is a sampling:
Digital TVs, electronics, etc. – $26 billion
Alcohol – $45 billion
Chocolate – $13 billion
Weddings – $70 billion
Pet liposuction, life-guarded pet swimming pools, weekly delivery to pet cemeteries/other personal pet services – $34 Billion
Please don’t misunderstand; my dog was my best friend. But I was too cheap to allow her to have liposuction before I did!
It seems reasonable to conclude, based on this info, that the pattern of our consumption is changing how we define normal and necessary spending. This is alarming as many Americans may no longer have the safety net of guaranteed retirement benefits or the means to help with their kid’s college or even healthcare expenses.
I had a friend who boasted about how she was able to pay all of her expenses on what she earned. She was a little confused when I suggested that the $9,000 credit card bill was proof that she was actually spending beyond her means. It took a minute to sink in.
This is not to suggest that we can’t spend – that would be terrible. I’d miss that satisfying rush of adrenaline that is often associated with buying. However the economic problems associates with living large beyond our means can be devastating.
So what can be done?
The answer is simple. Develop a spending plan – not to be confused with a budget. A budget has such a constraining ring to it….like a diet. On a food or money diet we may feel burdened and put upon and likely to spend and eat more than ever! A spending plan is not about deprivation. It is about choice and making good decisions.
How do you define what is normal and necessary spending?
Stay tuned for Part II: “Your Path to Financial Nirvana”