Did you inherit any of these bad money habits from your family? Try these simple steps to break the cycle and reach your financial goals.
Did you inherit any of these bad money habits from your family? Try these simple steps to break the cycle and reach your financial goals.
Early childhood experiences will give you habitual responses to things, and that can include how you manage your financial resources, says clinical psychologist Dr Bob Montgomery. “Growing up with parents who routinely indulged in expensive treats could programme you to develop a spendthrift habit, resulting in serious debt,” he says.
“On the other hand, if you lived in a household that was constantly on the receiving end of cut-off notices and phone calls from debtors, you might find yourself in a similar state of denial when you’re paying your own bills now.”
If you’ve inherited some of these toxic money habits, your first line of defence is to seek financial counselling. Once you’ve been given the money management tools by a qualified professional – such as managing debt, living within your means and how to set financial goals – you may be pleasantly surprised by how easy it is to turn your troubled relationship with money into a much healthier one.
FINANCIAL NAIVETY
Money was a subject that was never discussed in your home, and neither of your parents passed on any guidance or advice. Now you feel lost and overwhelmed as you’re struggling to stay on top of your financial commitments.
TO BREAK THE CYCLE…
Empower yourself.
Talk to friends who are financially savvy – you may feel a sense of failure and shame about having to ask for advice about money, but it’s okay to ask. Or go on the Internet and find a financial literacy education program. You can make really well-informed decisions when you’re armed with the right information.
Draw up a budget.
Have a clear understanding of the amount of income you have coming in each week and what your constant expenses will be: Rent or mortgage, utilities, mobile phone, Internet, food, entertainment, and travel. It can be quite a shock at first, but this will give you a reality check of where all your money is really going, and that’s the first step in gaining control over it.
FINANCIAL RECKLESSNESS
This is classic shopaholic behaviour: You seek instant gratification, spending money as a reward when things go well but also when you’re feeling low and your mood needs a boost. But this means your credit cards are always maxed out, so the high you get from shopping leads to a crash later on.
TO BREAK THE CYCLE…
Count to 10.
Stop, check yourself and walk away for 24 hours. This will give the endorphins firing off in your brain a chance to calm down. You need to change your response of “I’ve got to have it”.
Seek psychological counselling.
What you’re practising is a learnt behaviour, and on some level you’re getting satisfaction from it. So you might feel that if you lose this gratification, you’d lose your identity. You need to explore the issues behind it – the triggers. It may take time, but counselling can give you the tools to help you stop that behaviour.
FINANCIAL ANXIETY
There was a lot of stress around your home about meeting the mortgage and paying the bills, so you learned to associate money with fear. Now, no matter how well you’re doing financially, you obsessively cut corners, and can’t ever spend without feeling a sense of guilt and angst. You may even have sleepless nights worrying about money.
TO BREAK THE CYCLE…
Take small steps.
You can work your way towards feeling fine about spending money without setting yourself up for an unrealistic behavioural change. Decide on an item you really want and need, and set some money aside specifically for this purchase, so you’re not spending your savings.
Reward yourself.
It’s very important that you treat yourself when you achieve certain financial goals – it could be a massage or dinner and a movie with friends. Make a vision board to inspire you and help you overcome the feeling of guilt and anxiety.
FINANCIAL DENIAL
Being in debt was the norm and so like your parents, you rely on credit card to get by, pay off the minimum each month, and basically just survive in the moment rather than planning for the future.
TO BREAK THE CYCLE…
See a financial counsellor.
This type of lifestyle can’t be maintained. A financial counsellor may be able to negotiate with banks on your behalf to reduce your debt.
Shop around.
Find a credit card with a better offer, such as interest-free periods, lower interest rates and no fees. Switch to a simple card with no bells and whistles, that you only use when you need to: A debit card is a great option. And always make repayments above the minimum account. If you pay even just $20 more, it can reduce the time it takes you to pay off that debt by up to half.
TEXT: BAUERSYNDICATION.COM.AU
PHOTO:© SEASONS.AGENCY / JALAG / ZIMMERMANN, GABI
