I wonder, does when you get paid affect your relationship with your money?
Have you seen Saturday Night Fever?
Mr Fusco, can I have an advance?
Payday is Monday.
I know, but every place else
pays on Friday or Saturday.
And they’re broke on Monday. Booze, whores, p#*sing away their money.
This way you’ve got money all week.
You can save for the future.
F*$# the future!
No, Tony, you can’t f^#* the future.
Having not seen this classic film for years, a light bulb goes off. Many Americans are paid on Fridays. We Americans also have low savings rates, extensive credit card debt, and a seemingly insatiable hunger for the "good things in life." Is Mr. Fusco right? Does the correlation between payday and our shift into the weekend influence our money use away from savings and towards discretionary spending?
I began to think about when I was paid on Fridays and what was on my mind: Going out to dinner, seeing a movie, having a beer or sharing a bottle of wine… I would enjoy the pleasure of relaxing my purse strings, knowing well that I had plenty of money in my account. By the time I got serious about putting money into savings, my account was lower, and I felt pressure to tighten up the amount of money I was using.
I believe two
First, when we have more money we’re inclined to spend. And, as Mr. Fusco elegantly demonstrates, if this is timed up with when we’re spending on L & E, we will allocate a larger proportion of our earning towards this than we might otherwise.
Are we spending on the fun stuff when we feel rich on Friday and Saturday? Leaving us to pay our bills next, and allocate for savings and future spending at the bottom of our paychecks?
Just like Mr. Fusco, I think, ‘Yes’.
Who hasn’t been there? Looking at your account when it’s at its peak, thinking, “Ooooo, I just got paid. We can have a little fun with this,” feeling a spark of exhilaration in your chest ~
And on the other hand, when things tighten up towards the end of a pay period, it seems to make sense to hold on a little tighter to our pennies, live a little more modestly. Too bad this correlates with when most Americans look at putting money away.
Then what happens? The holidays come around (just like they do every year), or
your beloved Blue Heeler gets exceedingly sick and ends up with $1,800 worth of veterinary bills (but he’s priceless), or
your best friends announce their wedding in Maui in 6 months (you’re in the wedding party) … – & there’s no money put away for any number of such things.
Option 1: Cut back on expenses enough to cover the unanticipated cost (not always a possibility).
Option 2: Credit card it.
It isn’t always possible to cut other expenses enough to cover something you didn’t expect. It just isn’t. And when it is a possibility, if you really stretch
– well, surviving with taking minimal care of yourself and your family, while having no fun in the meantime, is no way to live!
So what is a hard-working, good-hearted, generally responsible family going to do? They are going to put the vet bill, or the holidays, or the wedding on a credit card.
Now we have new credit card debt! Damn!
So what’s my point?
~ Awareness ~
With our awareness of this effect we are empowered.
We are empowered to take steps to work around this effect. And effectively
allocate our spending to appropriately honor our needs for leisure and entertainment – as well as
savings and future needs.
How Is This Done?
- Sit down in a good time and space. Clear your heart and think about the things that are important to you. Your family, your home, your health….
- Next, consider how you want to properly financially honor each of these. Create an intentional balance where your numbers align with what’s truly important to you.
- Create boundaries
- Set up automatic transfers to fund savings and future spending.
- This both funds your goals and prevents the money from being available to spend elsewhere.
- When you are spending on leisure and entertainment, set up a debit account with a limited amount of money, or even pull out cash in the amount you feel good about spending.
- Get creative!
- Leverage your spending for the lowest dollar to the highest enjoyment.
- And consider ways to appreciate life that cost little or no money.
Now Imagine: You get paid. First, you automatically send money to accounts funding the holidays, the
unexpected emergencies, and
the once in a life time experiences. Next, you put the appropriate money aside to pay your bills. And then, you take a fitting amount of money to simply enjoy.
~ The Result ~
A balanced life and no credit card debt
– lovely, eh?