Sticking to a personal or household budget isn’t rocket science. All anyone needs to do is spend within his or her means. And yet, judging from the amount of debt many people carry, it’s not that simple. It’s sort of like healthy eating. We all know how to do it; it’s just that many of us don’t do it. What’s the problem?
Just as those who overeat have deep-seated reasons for doing so, people who overspend have complicated subconscious reasons for their self-sabotage. It’s so common there’s a term for it, money disorder. If your parents lived beyond their means, that might be why you are also living beyond yours. On the other hand, perhaps your parents were hoarders, and you’ve gone in the opposite direction.
Money Is the Number One Source of Stress
If you’re stressing over your finances, you are not alone. Three out of four people identify money as the number one source of stress in their lives.
It shouldn’t surprise anyone that there’s a correlation between how people budget their money and how well they organize their lives in general. Researchers developed a "prosperity to plan” scale. What they discovered was that people who had the same income, educational background and ethnicity had different credit scores, depending on their ability to plan. However, people who think ahead need to be versatile, and able to alter their strategies when situations change.
Stop Stressing Over Money
If you’re in a financial hole, the first thing you need to do is stop beating up yourself, it won’t help, and there’s a good chance it will make matters worse. If you can’t maintain financial control or stick to a budget, now is the time to analyze why this is the case.
Analyze Your Money Disorder
Do you ignore money or worship it? People who avoid thinking about money can unwittingly either overspend or underspend. For worshipers of money, although their tactic may be unintentional, the results are the same; they either hoard or compulsively spend.
Do you lack financial fidelity? When one member of a couple is financially unfaithful, this can lead to divorce. The unfaithful partner might commit to a budget, overspend, and then lie about it.
Do you feel guilty? Good savers can lose all their money by giving it away because they feel that they don’t deserve their good fortune.
What Do You Value that Money Can Buy?
Once you’ve come up with the psychological reasons you’re having money problems, the next step is to discover what you value. Our values are developed very young in life and don’t change without a lot of effort. Whatever your financial values are, write them down, then develop a mission statement:
Here are some examples of personal financial mission statements, each very different from the others:
- I believe in God, country and family. I’m grateful for what I have and want to be charitable both to people in need, and to those dear to me. I want to see my children financially secure.
- I believe in hard work. I believe a person ought to reap the rewards of that work. I want to live well, and be financially secure by the time I’m forty. I want to travel, give my children a good education, and retire when I’m fifty-five years old.
- I want to leave a legacy for my children. Our family business may struggle, but it is an important part of our heritage. I want our family to pitch in and see it flourish. Our business is our future.
We live in a material world, where so much of a nation’s economy is dependent upon consumer spending. When you’ve put down on paper what your core financial values are, you’ll be less susceptible to being lured into spending your money impulsively. And, you’ll be ready to set financial goals based on your core financial values.
Oreen Scott - After twenty-two years in the newspaper business, three years ago Oreen sold her house, car and almost everything she owned. A Canadian by ...
