Why do so many smart, successful, hardworking people have blinders on when looking at their spending? 

It’s not because they don’t care about their finances. People care a great deal. They work hard to earn it, worry about not having enough, and dream about what they could do if they had more. Paying attention to where their money is actually going is the last thing they want to spend their time on. 

Why is that? Because paying attention takes effort. It can bring up uncomfortable feelings, and frankly, it doesn’t always seem urgent…that is, until something unexpected happens.

Here are three reasons people avoid looking at their spending.

1. Ignorance is Bliss, Until the Bills Come Due

Reviewing our spending can create stress. Most often we are spending more than we realize and our credit card balances are creeping up.

It’s natural to want to avoid those uncomfortable feelings by putting off a review of your spending, but understanding where your money goes isn’t about judging yourself. It’s about deciding what you want your money to do before you spend it. 

2. We Don’t Really Know Where Our Money Goes

We know approximately what our mortgage, car payment, and other monthly costs are. What trips us up the most are the infrequent expenses. 

Some are predictable and some are unpredictable. I find people don’t know how to plan for that.  It’s pretty easy to estimate birthdays, Christmas, and insurance, but it’s harder to predict car maintenance, home maintenance, and emergencies. Infrequent expenses typically add up to 20-25% of our total spending.

3. We Confuse Having Money in the Bank With Having Money to Spend

Imagine looking at your checking account and seeing $17,000. Feels pretty good, doesn’t it?

But what if $8,200 is needed for upcoming bills: $6,000 for property taxes, and another $2,200 is needed for car maintenance? Suddenly, only $8,800 is left to live on. Are you setting aside money for birthdays? Christmas? Vacation? Now you have less to live on. 

Your bank balance tells you how much money you have. A spending plan tells you what that money needs to do.

Are You Ready to Learn More?

You don’t need to criticize yourself for past financial decisions. You need a clearer picture of where you stand and the life you want to create. 

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