Get Real About Your Finances

Let’s face it, none of us are perfect. We all make mistakes. Some mistakes are big and some are little and many mistakes are a result of bad thinking, because we are not acknowledging reality.

Unrealistic thinking about our current financial situation can result in significant mistakes that harm our financial future. In order to combat these financial mistakes, take a look at your finances realistically and be totally honest about your attitude and how well or badly you handle your money.

Let’s dig into those areas where you may not be entirely truthful with yourself.

It is really easy to say you NEED something when you really just WANT it. But there is a difference between needs and wants. Needs are the basics in life—food clothing and shelter. Wants are anything above and beyond basic needs. Things like the newest cell phone, the bigger house, restaurant meals or the latest fashions are all wants.

It is not necessarily bad to fulfill your wants. In fact, as humans we are wired to have goals and dreams. But don’t confuse yourself by calling the things you WANT a NEED. Because once you start confusing needs and wants it is easy to talk yourself into buying anything that catches your eye.

We can also fool ourselves if we think that the next thing we buy will make us happy. Happiness is a state of mind and while you may get some temporary satisfaction out of a new possession, it will never bring happiness for long. If you set yourself up to be happy based on buying things you will be in a never ending cycle of “what’s next?” It’s hard to be content if you are always looking to buying the next thing instead of appreciating and being grateful for what you already have.

In 1 Timothy 6:8, we read: “If we have food and clothing, we shall be content.”  It is much harder to be content if you have food, clothing and shelter, plus a long list of unfulfilled “needs” and a never ending inventory of things to buy which will finally bring you happiness. If you aren’t happy with what you have, you will never be happy when you get what you want.

We can also fool ourselves by justifying our debt because “everybody has debt.” There’s the school loan, the car loan, the mortgage, the second mortgage and all the credit card debt.  If you are using debt to subsidize a lifestyle you can’t afford, you are just doing bad math. If you spend more than you earn, it always catches up with you.

It doesn’t mean you have to pay for everything with cash; mortgages and student loans are a practical reality for the vast majority of Americans. But if you are digging yourself deeper and deeper into debt each month by fulfilling your WANTS, sooner or later you will find yourself in a hole so deep that you can’t climb out of it.

The debt cycle mistake is most often made when you don’t manage your spending versus your available income. Try writing down everything you spend for a few months and organize your spending into categories. (Here is a helpful spreadsheet.) Once you have a few months of spending in a format you can review, it will help you develop a spending plan so you can manage what’s coming in vs what is going out. In order to gain control and spend less than you make, it’s crucial to live within your means.

If we convince ourselves that we don’t make enough money to save anything it’s another big mistake. You may not be able to save a significant amount of money but if you are not saving anything, sooner or later you will run up debt. You are ignoring the fact that sometime in the future you are going to have a financial emergency. It may be a health issue, an accident, an appliance that needs to be replaced or a major repair to the car. But those unexpected expenses hit everyone. And if you haven’t saved any money, the only option is the credit cards or a loan.

We can again fool ourselves by delaying retirement savings because there will be time for that later. The best way to build a retirement savings account is to start early and save on a regular basis. In Proverbs 21:5 we are encouraged to save on a regular basis “Steady plodding brings prosperity…”Every American should be saving for retirement in some way. if your employer offers a 401k match, take advantage of it. A 401k match is free money from your employer as a reward for something you should be doing anyway.

Getting hoodwinked into investing in something because the returns on your investment are too good to be true can quickly turn into a financial disaster! There are ALWAYS risks with any investment and higher rates of return usually come with higher risks. When these “can’t miss” investment opportunities are presented to you, keep your greed in check. Taking big risks out of desperation for a quick gain usually results in losing your original investment. In 1 Timothy 6:9, we read “Those who want to get rich fall into temptation and are caught in the trap of many foolish and harmful desires which pull them down to ruin and destruction.”

And considering that everything we have is a gift from God, our biggest mistake is thinking that we don’t make enough money to be generous. Or we convince ourselves that we need the money more than the church does. There are many ways we can justify not giving. But the act of giving comes from what you have, not what you think you need in order to be generous. No amount is too small.

Giving is not done because God needs the money, it is done as a way for us to honor him and acknowledge him as the source of everything we have. When we are tempted to be stingy due to a perceived lack of resources, remember Acts 20:35, “It is more blessed to give than to receive.”

The best way to get your money straight is to be honest with yourself.