Three Common Mistakes That Raise Financial Anxiety
Adapted from Master Your Money, by Ron Blue
Not long ago I stopped in a jewelry store to have a ring sized and was standing at the counter when I noticed a well-dressed young man purchasing a Rolex watch. A Rolex watch has become to many people—along with a Mercedes or Bentley—a symbol of success. This man was purchasing a Rolex, and yet, when the sales contract was written up, I noticed the final contract price was approximately double the listed price! I thought there must have been some mistake, but it turned out that the ultimate price of the watch doubled after accounting for the finance charge. This man had purchased the watch with $285 down and a balance payable of $235 per month. When he walked out of the store with that watch on, he was giving the impression that he could afford a Rolex. Yet the question is, could he really? Being able to afford the payments is not the same thing as being able to afford the item.
Singles, couples, and families typically make three common mistakes as they establish their financial households: A consumptive lifestyle, failure to budget, and overreaching in their major purchases—especially cars! These mistakes challenge our stress thresholds and rob us of the peace God intends for His children.
Common Mistake 1: A Consumptive Lifestyle
I have been asked many times what the biggest financial mistake I see is, and the answer is easy—a consumptive lifestyle. A consumptive lifestyle is simply spending more than you can afford, or spending more than you should, given your other goals and priorities. Almost everyone in America falls victim to living a consumptive lifestyle. The illustration of the man purchasing the Rolex is all too common. Because I have known many who give away substantial sums of money, I was asked by one Christian leader what a million-dollar giver looks like. My response was, “If he looks like he can give a million dollars, he probably can’t.” The point is that someone whose lifestyle requires substantial expenditures must earn a considerable amount of money to have enough left after taxes to fund that lifestyle. Someone in the 39.6 percent tax bracket spending $ 100,000 to live must earn at least $ 165,562 to have $ 100,000 left after taxes to spend on that lifestyle. There is no way around that through tax planning, since tax planning requires that money be spent in order to reduce taxes. We are, as a society, bombarded with a hedonistic philosophy: “Enjoy it now.” “You only go around once.” “You owe it to yourself.”
Incidentally, I have observed—not at all scientifically proven but still observed—that the more television (or streaming) a person watches, the higher lifestyle the person is apt to desire. In 2023, U.S. companies spent nearly $ 330 billion in advertising. These ads are extremely sophisticated and effective at convincing you that you need something. In a similar way, the more time you spend in retail stores, the higher lifestyle you are apt to pursue, because you are surrounding yourself with temptation. It is much like going to the grocery store just before mealtime to do your weekly shopping. Chances are that you will spend substantially more than if you went after a meal and with a specific list in hand.
Common Mistake 2: No Budget
The second most common mistake in the area of living expenses is the lack of a budget. If you have no budget, which is, in effect, a short-term plan, in reality, you are planning to live as a responder. The best illustration of this is the person who “saves” thousands of dollars buying things on sale that are not needed. Many women buy responsively—hats, shoes, coats, and dresses, but the problem with being a responder is not all a female problem. Men also buy responsively and often do so with bigger items—boats, cars, investments, and second homes. The whole idea of living on a budget is distasteful to almost all of us because we view it as constraining. However, a budget can be one of the most financially freeing things you can have. A budget guides you and tells you when you are on course, just as Google maps does when driving in an unfamiliar area. Not having the map (or worse cell coverage) creates fear, perhaps frustration, and certainly anxiety. The same can be said about living without a budget. A budget doesn’t keep you from spending money on your needs or even wants; it keeps you from spending responsively, impulsively, and unwisely.
Common Mistake 3: Driving to the Poorhouse
The third most common lifestyle mistake is buying and selling automobiles. Decisions about automobiles may involve more pride and ego than any other financial decision. A newspaper quote points this out: “Logic and automobile purchases do not go hand in hand.”
I learned this first-hand several years ago before I became a Christian. Although I had achieved almost every financial goal I desired, I still wanted to purchase and drive a brand-new Cadillac. However, I was only thirty years old at the time and felt that driving a new Cadillac would be pretentious and might even be harmful to my business, so I purchased an Oldsmobile 98 with all the accessories. At the time, I thought that within a couple of years, when I was older, I would trade the car in for a new Cadillac. During that time period, however, I became a Christian, and my goals and desires changed rather rapidly regarding material possessions. I lost interest in driving a new Cadillac. As time went on, the Oldsmobile eventually had close to 150,000 miles on it—and looked it. The car had to be replaced.
Once you start looking at new automobiles, however, your tastes change and your desires increase. I found myself looking at new cars in parking lots, on the road while I was driving, stopping at auto dealerships, and in every way lusting after a new car. I decided at that point to do a study to determine the best car to buy from a strictly economical standpoint, taking into account all of the factors, such as gas mileage, cost of repairs, license cost, financing cost, opportunity cost of the cash paid out, insurance cost, and depreciation. I spent hours and hours comparing all the numbers and coming up with a definite conclusion. I found without exception that the cheapest car I could own was that Oldsmobile! Even though the cost of repairs was substantial and the fuel economy was incredibly low, they did not offset the much higher costs related to a new car in terms of license, insurance, maintenance, depreciation, financing costs, or opportunity costs.
After studying this whole issue of buying automobiles, I came to two conclusions: The cheapest car anyone can ever own is always the car they presently own, unless it is sold and the proceeds reinvested in a lower-priced car; and the longer a car is driven, the cheaper it becomes to operate. Interestingly, I have redone this exercise a few times over the years, and I continue to come to the same conclusion as I did before.
Turning the Tide
The major key to success in reducing living expenses is recognizing that every dollar saved in the living expense category goes directly to your cash-flow margin. Each living expense item must be evaluated item by item and then controlled. There is no magical way, but each reduction frees dollars for other goals and frees us from the tyranny of consumerism and the financial anxiety that looms in its shadow.
Faith & Finance Perspective
The author mentions that his “goals and desires changed rather rapidly regarding material possessions” when he became a Christian. Yet, many Christians still find themselves in the grip of consumerism, unable to resist the allure of the comforts, conveniences, and luxuries that are dangled over us on a daily—if not hourly—basis. This suggests a correlation between the depth of our faith and our ability (or willingness) to deny ourselves (Matthew 16) and exercise the countercultural spiritual fruit of self-control (Galatians 5).
When Christians commit themselves wholeheartedly to the deeper life in Christ, the allure of the world begins to fade. Our hearts begin to align with God’s, and our priorities shift. We delight in being slaves to righteousness (Romans 6:18), trusting our Heavenly Father to provide, believing He owns it all (Psalm 24:1), and does not withhold from His children (Matthew 7:9-11). And, best of all, we experience firsthand the promised peace that passes understanding (Philippians 4:7).
Where do you find yourself in the battle? Are you daily caught in the allure of more and better? You’re not alone—but you’re not powerless! Our Lord longs to free us from the tyranny of possessions and to rely fully on His all-sufficiency. He doesn’t get frustrated with us or condemn us in our weakness. Instead, He invites us to ask Him in. Once we do, He begins his gentle but glorious work of restoration and renewal.
Now we look inside, and what we see is that anyone united with the Messiah gets a fresh start, is created new. The old life is gone; a new life emerges!
- 2 Corinthians 5:17, MSG