In my country there is a very “clever” system to teach you that you can have what you want now and pay for it later – Splitting your purchase into payments.
This is not only harmful in planning and keeping to your budget on a monthly basis but it also nourishes the need for immediate gratification.
Instead of learning to save for what it is you wish to buy, it teaches you to buy now and think later about how you’re going to pay for it.
For example instead of saving an x amount each month for something you want to buy (TV, computer, speakers, vacation, shoes, etc…) and then having the option of paying for it in cash which more often than not usually gives you bargaining power or some sort of discount, you go out and purchase your item and pay for it in payments. While this might not seem like the most tragic thing you can do it can be very hard to keep track of what you actually spend a month on certain categories. Most often I find people forget how many payments they actually have and just keep adding to them.
For me this issue really comes home when after the credit bill is paid, I start the month with hundreds if not thousands of $ already “spent” on the card (in payments) and if I add to that all my regular purchases and expenses it adds up to quite more than I budgeted for.
There are some cases where you have no choice but to pay in payments, mostly in cases of emergency. Which is why it’s always a great idea to have an emergency fund.
Unfortunately for me I am still in the first steps of covering and eliminating debt so more on the savings and emergency funds tips to come in the future (hopefully near).
Are you guilty of splitting payments? How do you battle the urge to spend money in hopes of ‘making up for it’ in the future?