On Friday, I shared an infographic on Bad Spending Habits and How to Fix Them, and I started thinking about living beyond our means. It’s a common problem and one, deep down, we know isn’t good for us. So why do we do it?
Becoming financially healthy is a lot like getting in shape. We know that we need to eat plenty of veggies and fruits, cut back on sugar and fat and exercise if we want to lose weight. Yet, we don’t. It’s the same story with getting financially healthy. The solution is simple: Eliminate debt, stop spending money you don’t have and live within or below your means. And just like people yo-yo diet and lose and regain weight all the time, people fall in and out debt regularly too.
Debt is just one symptom of bad money habits. While it’s certainly something you need to address and eliminate, there are a few steps you need to complete first, if you really want to permanently break your bad money habits. They didn’t don’t form overnight, and there is no magic pill or solution to make them disappear either. Success lies squarely on your shoulders, and you will need to make a conscious effort to change and/or remove some of your long-held money habits and beliefs before you can get rid of debt.
This seems obvious, but if you don’t honestly believe that you need to change and commit to doing the work, you don’t need to bother with the other steps. The first step is where most people fail. They either don’t believe there is a “real” problem or they are unwilling to do the work to get their financial house back in order. You need to take ownership for your situation and commit to changing it. No one else can do it for you. My friend, Grayson, at Debt RoundUp wrote a great post on changing your money mentality. If you still find yourself struggling, ask yourself why.
Don’t feel ashamed that the thought of losing friends or disappointing your children scares you. But also don’t let it stop you from doing the right thing. Your true friends will support your efforts, even if it puzzles them initially. And your children’s lives with be 100% better because you got out of debt and demonstrated good financial behavior to them. If you feel any resistance, keep asking yourself “why” until you discover what is really holding you back.
Most money mistakes have an emotion behind them. Anger from getting passed over for a promotion led to buying a big-screen TV. A break-up led to weekend in Vegas. Boredom led to an all-day shopping spree. You know the drill. We’ve learned to quell our emotions through spending. It makes us feel good, at least temporarily. Your next step is to recognize when your emotions are controlling how you spend your money.
One way to help determine this is to ask yourself: “Is this something I truly need or am I feeding an emotion?”
Notice that I used the word, “need”. Most emotional triggers are buy right now moments, so if you use “want” over “need” – then the answer will almost always be “yes”. Slow down and figure out if this something you need or if you’re trying to soothe an emotion by buying something.
Remember, emotions are not bad. We certainly don’t want to stop feeling, but we do want to stop letting them drive our spending habits.
This is a place where a lot of people get stuck. They spend countless hours, days, weeks, months and even years beating themselves up for their past money mistakes. Please stop. It’s important to understand the reason behind those mistakes (i.e. your emotional triggers) but berating yourself doesn’t help. In fact, you’re wasting energy on something you cannot undo when you should instead use that energy to propel your life forward. Accept responsibility for your mistakes, forgive yourself and move on.
Now you’re in a place where you can tackle your debt. You have the commitment to do the work, have control over your spending, rather than your emotions and have forgiven yourself for past mistakes. So let’s get started.
When you are accustomed to a lifestyle funded by credit cards, it can be a bit sobering to imagine what life must be like when you start living within your means. You imagine it’s dull and boring. You say “no” more than “yes”. It sounds kind of awful. Well, it isn’t.
It’s quite the opposite, in fact. Now you live on your terms, not your creditors terms. You spend money on what truly makes you happy and save for it. You enjoy your vacation or big screen TV without that nagging sensation that you’re about to fall off your own fiscal cliff. You don’t lose sleep worrying about paying bills because you already paid them in full. You realize that living within your means is the good life you always wanted.
Shannon
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SHANNON RYAN, CFP®
Taking the steps to get out of debt can be hard, but it's so worth it. Financial freedom is a great feeling.
Have a great week!
At least I managed to break that habit when I went to grad school in England. Nothing will scare you into keeping a budget like possibly be stranded in a foreign country with not enough money if you're not careful. I still remember how it felt when I was bored on weekends and just desperately wanted to go shopping - especially in a new country where everything was a little different. But sheer terror of homelessness abroad made me realize that streaming TV shows, going to the library, walking all the different hiking paths in the area and studying were much better uses of my money... and they didn't make me freak out that I was overspending.
Great post, Shannon :)
Also, creating budgets. Every piece of research I've ever read on tracking (finances, weight loss, etc.) shows it works. It's crazy to see at the end of the month, if you actually track it, how much of your money goes towards the little things. All the coffees and snacks really add up.
The easiest thing was to identify the triggers that made me spend but those were the hardest habits to break too.
And that made it easy to get #4 tackled. There are still times I feel like spending to by an outfit I fell in love with so I just don't go to the store at all when I'm feeling like that.
I've learned if I go to the store at the end of the day when I'm tired, I'll just get what I need and be done with it to get home and that works, LOL.
Thanks for sharing these with us! I hope you're having a great weekend!
I love how you say to forgive your past money mistakes! I think I haven't done that yet and I keep repeating the same thing over and over again! Thanks!