At some point in our lives, most of us fall prey to a purchase we can’t afford. For some, it is a one-time slip; for others, this one-time mistake begins a long cycle of overspending and increasing debt. So why do we do it? Surely nobody wants to be in debt.
What many of us fail to realize is that debt problems are often emotional, resulting from unconscious habits and attitudes that cause you to spend beyond your means. And while we all know the first rule of managing your money well is to spend less that you make, there is a stark contrast between knowing what to do and actually making it happen.
Improving your financial situation, no matter where you’re at this moment, is within reach and it begins with YOU. After all, you created your habits and you have the power to make positive changes. To resolve your debt problems and begin building wealth simply requires changing your daily habits. Here are a few financial practices to follow on your path towards financial success:
1. Emotional Spending. Ask yourself a few simple questions to determine if you’re an emotional spender. Do you relieve stress by hitting the mall? Are there clothes in your closet with the tags still attached? Do you often experiences buyer’s remorse? Has shopping become a form of “retail therapy?” If you answered “yes” to any of these questions, you may be an emotional spender. You thrive on the temporary gratification of a purchase, despite the debt it may cause. To combat emotional spending, force yourself to wait a few days for non-planned purchases. Your emotions will settle down as you process whether or not the item is actually worth buying.
2. Entitlement. Todd Tresidder defined entitlement thinking as “the belief that you magically deserve all the good things in life regardless of what your financial statement says.” Reality check – you are only “entitled” to what your bank account shows you’ve earned. Before you reach for the latest and greatest item on the shelf, ensure that you can afford to pay for it immediately.
3. Self-Worth. The media is constantly leading us to believe that such and such a product will make us prettier, smarter, happier, or live longer. But when we believe our happiness is contingent on stuff, there’s a problem. Your possessions do not determine your worth. Separate your spending from your feelings of worth by asking yourself: is this purchase satisfying a genuine need or simply a want?
4. Lack of Planning. Most folks in debt tend to live month-to-month because there is no plan to do anything different. No budget? No retirement? No strategy for growing your income? No good. Without a plan, debt becomes your default in a financial emergency. Begin by taking a look at your current financial state (income, expenses, debt, etc.). After you have a clear lay of the land, outline where you’d like to go and create reasonable action steps to achieve your financial goals.
Jerome Hines once said, “The only proper way to eliminate bad habits is to replace them with good ones.” Your small, daily actions will determine your success. Feeling like you don’t know where to begin? Good news – Prosperity Connection is here to help! Talk to one of our financial coaches or attend “Money Habits & Attitudes” on June 7th and begin taking control of your finances.
By Abby McNamara