I used to be really uncomfortable talking to people about money. It’s a weird social thing. I remember when I was little being told that it’s rude to ask someone how much someone makes.
Most people feel uncomfortable talking about money. Why?
I imagine it’s because most people aren’t in control of their spending habits the way that deep down they wish they were. We put money on a pedestal. Saying things like, “If I can just make another X dollars, then I’ll be comfortable.”
Really? Do you need more? Will that really solve the problem? Allow me to be clear, I love capitalism. I love money. I love spending it. I love making it. But I don’t see money as a finite resource. In my limited experience, there is always more. Any time I needed it, I found it or made it.
To me, money is simply a way to quantify and then transfer energy. If I want something, I trade my time for it by working so that I can make the money necessary to acquire things I want or need.
When spending money I can usually trace my use of that money back to 1 of the 3 S’s:
Security, status, solution
Security is one of the easiest to define. The best example is insurance, it’s not about needing it. It’s about the warm blanket of security that you wrap yourself in knowing that you have it IN CASE you need it.
Typically, security purchases provide more perceived security than actual security, but there is value all the same. If you get rear-ended in your new car, you want to have full coverage. If you break a bone, you want to have health insurance. Security spending is a way for us to sleep without the “what if” alarm going off in our heads constantly.
Here are some numbers on “security spending”. The average individual American pays around $6,000/year for health insurance ($500/month). The average American family pays over $15,000/year for health insurance ($1,250/month). The average family deductible (how much you need to pay doctors BEFORE your insurance kicks in) is $3,000/year.
Status spending is all about how other people see you and/or how you feel about yourself in the eyes of others. New Car, Bigger House, New Shoes= Status. This is one of the greatest debt pits that so many of us fall into. Do you know that the average new car payment is $563, while used cars have an average monthly payment of $397.
Now we all need transportation. I get that, but if you’re constantly stressed about money or saying things like I can’t afford to buy healthy food or pay for a gym membership and you have a $500 car payment… You have a priority problem.
Solution= Mechanic when your car breaks down, dentist when your tooth aches, plumber when the toilet leaks
Gym memberships for most people fall under Solutions. I want to lose weight or I want to get healthier. We see these as problems to solve. Unfortunately for many, these aren’t really high priority problems.
You may say, “whoa they are high priorities for me.” To which I say, cool. How much did you spend on fitness last year? The answer is that the average American spends about $155/month on health and fitness. With $55 going towards supplements and $35 going towards gym clothes… That means all other expenses make up ONLY $65 for the average person.
Think about this… What do you do if your car breaks down and the mechanic says it’ll be 1400 to fix?
You might get a 2nd opinion, but more likely you find the money no questions asked because you see your car as a necessity that you need right now.
Imagine if you valued your body the same way you value that car. Most people put off their health and fitness because they see it as an expense. It takes time, money, and energy. But what if we considered our health an investment?
I think we can all agree that one of the greatest expenses for most people is getting sick. Not only are their expenses for treatment and medicine but lost wages as well. Having to take a week off being sick could cost you hundreds of dollars.
Now imagine that you let yourself get in such a state of dis-ease that you get diabetes. Here’s a stat for you that hit hard for me when I read it. The average health expenditure is $13,581 per year for those with diabetes and $3,954 for those without in the US.
If I told you that I’ll give you $10,000 this year to start eating healthy, exercise, and lose some weight. Would you do it?
Most of us think we have a money problem. In reality we’re too close to the tree to see the forest. We’ve bought into the story that “I can’t afford it.” We’ve created habits of spending on things that may not be moving us to our goals.
I’m going to wrap this up with an exercise that you can do right now, today, to identify if you fall in this category. Hell, I do this once a year now to audit myself.
I took a client through this exercise after he told me that he couldn’t afford to buy healthy groceries for himself and his family. Through it we found out that he had been spending upwards of $800/ month eating out! Between stopping at the gas station in the morning, pizza and dinner on the weekends, and hitting the drive thru for lunch. This had never registered to him because it had become a habit which became a story that “I can’t afford X.” In this case X = eating healthy.
Step 1- Print off your CC and bank statements from the last 3 months. Then circle every transaction that moves you away from your goal of health and fitness. Could be eating out, buying a new tv, whatever. You gotta be the judge here.
Disclaimer: you’re going to have to be honest with yourself on this, it might reveal some bad spending habits. That is OK! The first step is awareness.
Step 2- Tally the 3 month total
Step 3- multiply by 4. This is an estimate of how much money you have spent in the last year that moved you further away from the healthy person that you want to be.
Step 4- Commit to taking a portion of that $ and budgeting it towards health and fitness.
If you’re currently spending $1000/month on things that move you AWAY from health and fitness, what could you do with 25% of that? $250/month or $3000/year dedicated to a healthier you?
For many of us it’s not really a money problem. It’s a perception of what that money gets us. Security? Status? Solution?
Investing in your health and fitness is one of the ONLY things that covers all 3. It’s the greatest investment you can make. This exercise shows you how.
– Cody Ringle