Thursday, June 17, 2010

Financial Blind Spots

Anybody who drives a car knows what a blind spot is. It is the spot just at the driver’s side by the rear quarter panel. You can check all your mirrors but the only way to actually make sure that there is nothing in the blind spot is to turn your head and look. This can be especially important on the freeway where drivers come up on you fast. I am ashamed and embarrassed to say that I actually backed into a telephone pole (very slowly) that was in my blind spot. How can anybody not see a telephone pole!?

In many of the conversations I have had with people about finances I have found that we all also have blind spots in our finances. For some it may be overspending on anything from food, a hobby, running around in the car, not price comparing our insurance rates annually, or not balancing our check book and having unnecessary overdraft fees. On the other side of the coin are those who don’t overspend but under spend. This can be equally as important. What about the drip in the faucet that increases the water bill, or buying cheap light bulbs that use more energy, or being chincy* with the waitress at a restaurant on the tip with the rational that they get a wage anyway? Another aspect of blind spots is holding onto something or an idea long after it’s useful life. An example of this is:  XX brand is the ONLY good vacuum cleaner despite what consumer reports has said for years.  Or, all generic products are inferior in quality.

The list can be as individual as the person but the error flies in the face of all the other work they do to economize and achieve their financial goals. How can we discover our own blind spots since we obviously cannot or will not see them ourselves? Here are a couple of ideas:

1. Keep track of every penny you spend for at least a month. This may help you spot over expenditures that are out of balance or proportion with the rest of your budget or income level.

2. Ask you family or pay attention to what they might already be telling you.  Especially listen for phases that begin with "You never....." , or, "You always..... " Although it may be an exaggeration there may still be some truth to it.

3. De-clutter your home in every drawer, closet, and surface. This will often cause you to see where you have been spending more money than needed or less. The added benefit of this step obviously is a clean house and you may have enough to earn some extra with a garage sale or start a pass around bag. You may find it is no wonder that you have to do laundry ever three days. You have only three pair of socks!

4. Ask a friend. I am fortunate enough to have a couple friends and family members that I can discuss financial things with from the smallest expense as a dollar to the major expenses. Ask them directly. What do you see as my financial blind spot? You still don’t have to agree with them but by listening you have something to consider.

Finding your blind spots and being aware of the blind spots of those in your immediate family can greatly assist in having a reasonable and workable budget. More importantly a better, more balanced life.  Checking your blind spot may even keep you from hitting your financial telephone pole.

*If anyone thinks this word is spelled incorrectly please let me know, I couldn’t find it anywhere but I know it’s a word and I didn’t make it up. :)


Kevin said...

I think #1 is the most important. I think everyone who does that will always be surprised at how much they spend in different categories.

Anonymous said...

I took the challenge. The correct spelling is chintzy.
See the word list here