Financial Responsibility – Why It’s Important

financial responsibility

Financial Responsibility

Fifty-percent of United States citizens have no financial buffer between themselves and poverty. It’s clear many of us aren’t taking financial responsibility seriously.

According to the Center for Financial Services Innovation, as many as “half of Americans say their expenses are equal to or greater than their income.” The percentage is higher for those between the ages of 18 and 25. With half of the country living so close to the “edge” of financial disaster, their stress factor is high and can trigger health issues. Why are so many people in such poor financial health?


Spending Habits


A lot of millenials (born 1982-2004) spend more than they earn. Credit card interest compounds their debt, and eventually they are at risk of bankruptcy. Overspending is behind much of the debt millenials are incurring.

Men are spending as much or more on sneakers than women are on shoes. Karen Katz, Neiman Marcus’ CEO, related that the average sneaker sale is priced $360 a pair. One man who was interviewed admitted to spending up to $1000 a month for the right pair of sneakers. Some men are brand loyal, while others collect the best from each designer. Many young adults are going into debt from “instant gratification.” People see an item, and they want it right then. Saving for something you want isn’t “instant” but the credit card is.

Women also have their weaknesses in the fashion vein. Designer handbags and sunglasses cost several hundred dollars each. One woman admitted to having eight pair of sunglasses that cost a minimum of $350 per pair, one designer handbag costing $1100, and two bags that were more than $500 each. These young adults are spending their retirement money. If the money spent on sneakers handbags, and sunglasses were invested, retirement funds would be growing. Unfortunately, some people are also spending bill money for things they don’t need.


Understand Why You Overspend


There are reasons why people incur debt, and most of them are simply poor excuses. Shoppers rationalize why they must buy some item. Have you gone into a store to buy one specific item and come out with three or four? You are not alone. Compulsive spending is a serious disease for some people (monomania), and they may not be able to be cured without professional help. If your credit cards are maxed, you buy things that you don’t need, and you hit all the sales, you may be a compulsive buyer that needs help. There may be identifiable triggers connected to your buying habits.

  • Boredom
  • Depression
  • Envy
  • Emotional distress
  • Financial stress
  • The wish to be envied for your possessions
  • Competition
  • Purchases are often stored away and not used



It’s important to be honest with yourself if you recognize any of these spending traits. Compulsive spending can cost you your marriage, your job, and your financial security.


Not everyone who spends too much money is a compulsive spender. Some people have developed bad habits, which have caused them to be in debt. They often underestimate how much the “small things” total up to in a year. Those $5.00 to $10.00 lunches can add up to over $2500 a year. If you use a credit card, the price goes up with interest. Other small items that add up quickly include specialty coffees, sodas, movies, pizzas, and alcoholic beverages. You can easily cut your budget by $5000 to $10000 a year. It’s not necessary to have the latest smart phone model, the largest data plan, and a new car every two years. Don’t allow social constraints to dictate your spending. You earn your salary, and you should learn to make it work for you.


You Need A Budget


Without using a budget to both plot and track your spending, you will continue to go deeper in debt. Depending on your preference, you can use a hard copy budget system or a software program for your electronic device. Spend at least two months recording all your daily expenditures. Include even the smallest items that may cost less than a dollar. You’ll be surprised how quickly they add up. In two month’s time you should have a good overview of your spending habits. Take a good look at how much money you waste each month, and consider how those funds could be used to pay down your debt. Once your debt is reduced, you can start using extra funds to build security for your retirement.

financial responsibility

Start taking financial responsibility for your money. If you are a compulsive shopper, get some professional help. The careless shopper may need help getting his or her spending back on track. Never be ashamed to talk to someone about taking control over your money and your future.