Sharing Daily Discoveries About Personal Finance And Business Topics

The Risk of Spending Before You Get Paid

Recently here in BC there has been some massive storms that has caused major power outages and damage to a lot of structures. It has cause of lot of businesses and events to close until the situation gets better. One theme I have heard was how financially people were anticipated to work on jobs that unfortunately got cancelled. The thing was they planned their finances in anticipation that they would be working. Unfortunately, some people made major purchases ahead of time and will now have to pay the interest to sources like their credit cards as a result of not having the income they were expecting.

I often say that when it comes to money and finance you should usually never consider money as yours until it is in your bank account. Example, even if you were working at a full time job and expecting a pay cheque three days later I wouldn’t spend it in anticipation of getting it as you never know what could happen. Like in this example, it just ended up creating a financial mess for many.

For myself I only spend what I know that I have. It doesn’t matter if you have a $1000 or $50,000 credit limit. If you only have like $100 in your bank account then at max that is all you should be spending on your credit card. Not disciplining yourself to do so just puts you at so much risk in paying those ridiculous interest fees. If you want to spend more you are going to have to save more until you actually have enough to purchase something. That way, hopefully surprising events like these won’t put you in a financially awkward position.

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