"A lot of people set themselves up for
failure because they have a mindset of either indulgence or deprivation."
Spend enough money, and you'll quickly learn the
definition of a bad money habit. Few people
need to be told not to overspend on credit or debit cards or to curb impulse
shopping. You know you shouldn't, even if you always do. What you need are
solutions.
But solutions are hard to come by, says Ramona Pearson, a
certified public accountant and personal financial advisor in Detroit. She has
been advising clients since 1984, she says, and from what she has seen, these
bad habits are often practically baked into our brains.
"Money habits are formulated at a very young age for
most people," she says. "I think how money works and what it means is
deeply ingrained in our psyche."
Shelly Smith-Acuna, dean of the Graduate School of
Professional Psychology at the University of Denver, agrees. She says if you
have a really bad money problem, therapy might help. "Sometimes a problem
is a pretty simple fix, but other times, money represents something deeper,
maybe comfort or security in a deep way. Therapy can help you explore and
understand some of the meanings behind why you spend your money," she
says.
Whatever your problems with money, you can change – but
it’s going to take work. After all, you're trying to break lifelong patterns.
Start with these strategies:
Set realistic goals. Smith-Acuna treats many patients with
money problems. The issue especially comes up during couples' therapy.
Naturally, a lot of her patients try to fix how they manage their finances, and
Smith-Acuna believes a primary reason people fail to change a bad money habit,
"or any habit, really," is that they fail to set realistic goals.
"A lot of people set themselves up for failure
because they have a mindset of either indulgence or deprivation. So if you try
to deprive yourself of too much, where you spend almost nothing, then you end
up giving up, and you indulge, and then you overspend," Smith-Acuna says.
"So if you have an unrealistic plan, you're probably going to lose
control."
That was the thinking behind Martin Grunburg's free app,
"The Habit Factor," available on Apple and Android devices. The
San Diego-based entrepreneur's app is designed to help people create good
habits, and it sends reminders on certain dates, enabling users to remember to
complete the tasks they want to start doing regularly.
"Good habits happen when planned; bad habits happen
on their own," Grunburg says.
Change your mind set. Your bad financial habits may be
something you're hard-wired to do, but if there is one particular vice you're
trying to fix, you may be able to change the wiring easier than you’d think.
Smith-Acuna says she had a couple in therapy who
constantly quibbled about what she feels has become a monetary cliché:
"They would always argue about how much money they were spending at
Starbucks."
Smith-Acuna says the wife loved capping off each workday
with a gourmet drink, much to the chagrin of her husband, who disliked the
$4.50 she was dropping so regularly.
Ultimately, the wife ended up quitting her Starbucks
habit without too much trouble. The secret was drilling down and figuring out
that her daily fix was important to helping her unwind from work. So instead of
replacing her drink with nothing, she got something else, something free, in
return. After work, her husband played with the baby and gave her 15 minutes of
downtime instead.
Change how you spend your money. Even if you only test
this out for a week, or a day, it may help you slow down your spending if you
switch from paying for merchandise and services with a debit or credit card to
paying with cash. It's easy when you're using plastic to mindlessly swipe and
fall into a pattern of not thinking or noticing how much you're actually
spending.
"Cash is tangible and can make one feel [more
aware] when money is leaving the household, thus making one more
spending-conscious," says Jeff Fishman, founder of JSF Financial Services,
Inc., in Los Angeles.
Pearson endorses this approach, too. "You can divide
up your money and put [it] into envelopes, marking down on the envelopes what
each pile of money is for. That can make it easier to see where your money is
going," she says.
Track your spending. Try doing it for a month, suggests
Mark Kantrowitz, publisher of Edvisors, an informational website about planning
and paying for college. Kantrowitz has seen many college graduates struggling
with student debt while
learning to juggle new expenses, such as auto loans, credit card debt and
mortgages.
That's why he suggests becoming anal-retentive about your
money for an entire month. "Get a receipt for every purchase, and if a
receipt is not available, such as purchases from vending machines, write down
the amount, date and description in a small notebook. Each night, transcribe
the expenses into a spreadsheet or a free program like Mint.com,"
Kantrowitz says.
He suggests breaking up your expenses into categories
like food, clothing, housing, medical care and so on, but also labeling each
expense as a need or a want.
"Be realistic as to what is really necessary. A need
is something where you would die or go to jail if you didn’t spend the
money," or ruin your credit, Kantrowitz says. "At the end of the
month, total up all the categories."
Do this, and you'll be more educated about how much money
you actually have, and how much you have left over for fun stuff, Kantrowitz
adds.
Reward yourself. There is probably a reason you developed bad
habits, which are often adopted on the road easier traveled. So if you're
suddenly balancing your bank account every day, or you're regularly putting
money into an emergency fund, plan to give yourself some sort of prize. Nothing
too crazy, of course. You don't want to undo all the progress you’ve made, but
maybe you can buy yourself a new pair of shoes, download some music or go to
the movies.
"If you set a challenge for yourself, and you can do
it for two weeks, then you deserve a reward," Pearson says.
So treat yourself. If, for the past two weeks, you've
been saving money or spending it more wisely,
you can probably afford it.
No comments:
Post a Comment