5. The trap of “Deserving” something

This one gets more people in trouble than anything else, I think, and probably accounts for a high percentage of the people who say “Our bills are only $2100 a month, and we make $3000; why are we always broke at the end of the month?” Because you “deserved” yourself out of that $900. “It’s been a long week, I deserve a dinner at El Swanko ($70).” “The kids have been terrors today, I deserve a trip to the spa ($80).” “We worked on the house last weekend, we deserve to go somewhere this weekend ($400).” “So-and-So got the promotion I deserved because he kissed up to the boss, I’m going shopping ($200).” For those with less income, it comes out in things like trips to the snack or soda machine and taking the kids out for fast food.

Yes, we all want a few things beyond the bare necessities of life. But what you really deserve is to keep your money for yourself so you can enjoy freedom. The concept of "deserving" something as a reward has been marketed to Americans so thoroughly that very few question it. Even fewer question just how much it really costs them. For the lowest income people, you actually spend almost 10% more than you think you do. For people with larger incomes, the real cost may be 30 - 40% more than you think it is. How do I figure that? Easy, that's how much you had to earn in order to spend that much. If you want to spend $10, you had to earn at least $10.83 before social security taxes to have $10 left to spend. If you're self-employed, that's about $11.66.

That's one of the reasons you'll hear many budget writers tell you the best investment you can make is to cut your expenses. If you make a $1 lunch for work as opposed to buying one for $3 (which is really low end for a purchased meal), you've not only saved $2, you've really saved $2.17 because that's how much you'd have had to earn for that $2 difference in lunch. And the $2 you didn't spend can earn interest, so you do even better. A nice lunch can be put together in 5 minutes, which means you can make 12 lunches in an hour. $2.17 x 12 is about $26.00 an hour, which is a good return for most of us, even if you discount the time you spend buying your lunch at work.