- How we sabotage ourselves around money.
- How to identify our habits around money.
- What we say to ourselves to justify those habits.
- How to create new money habits and new things to say to ourselves.
- Learn to recognise when we’re in our old automatic habits and how to switch to the new ones.
***This post may contain affiliate links, which means I may receive a small commission, at no cost to you, if you make a purchase through a link on this blog. I would never recommend a product I don’t use or love myself! You can read the long, boring, legalese disclosure here.***
What happens in the “quiet” of our mind…
“It’s a bargain, they’re 50% off!”
“My friend Katy swears that everyone needs one of these.”
“I need the right car and it’ll only be an extra $500 a month, I can afford that.”
“I live a stressful life; a drink at the end of the day helps me wind down.”
If you’re anything like me, you can relate to one or more (maybe all!) of these quotes as things that you’ve heard yourself say to justify your spending. It’s these things that keep us locked into constant debt, in a state of living from paycheque to paycheque. If we want to change things, get out of debt, get out of the cycle of overspending and living from hand-to-mouth (even if it’s a silver-plated hand-to-mouth situation like ours is!), then we need to take three steps:
- Identify our habits around our finances and what we say to ourselves to justify those habits
- Create new money habits and new things to say to ourselves
- Learn to recognise when we’re in our old automatic habits and switch to the new ones
The 9 Areas to look at:
When we’re trying to find the ways that we sabotage ourselves and the things that we say, there are nine distinct areas we need to look at, but before we do, we need to be aware of something: our entire advertising industry, possibly even our entire media system, constantly bombards us that we are right in saying each and every one of these things. I’ve put an example of something an ad may say under some of the areas. Being aware of them can help us to see what’s going on and give ourselves the opportunity to buy into that behaviour/belief… or not.
Ad Example: you work so hard, don’t you deserve to treat yourself to this?
If we’ve ever said “I deserve this” as we grabbed something and took it to the cash register, that’s entitlement. We may try to fool ourselves into thinking that we’re completely justified but if we were being completely honest with ourselves, if we were completely justified, we wouldn’t need to reassure ourselves about it, would we? (That sentence got away from me completely, lol!).
Entitlement is something like a reward system: I work hard so I should be able to buy this for myself. It’s about changing the way we reward ourselves; pay off debt rather than adding to it.
2. Instant Gratification
Ad example: Lose 7lbs in 7 days
Instant gratification is the desire to experience something now. The problem with instant gratification is that it’s instant, it’s fleeting and it’s soon over. Very quickly we need the next fix of instant gratification, and then the next one. Anyone marketing anything knows that people will go after quick fixes, including me. What got you reading this article? The headline: 9 Ways We Sabotage Ourselves Around Money. We want to know what the problem is and how to fix it, now. We don’t want to know that it may take some time or that it might be hard work, we want easy to follow, step-by-step magic pill.
Unfortunately, it’s this that keeps us in our downwards money spiral and it’s something that we must recognise and change into delayed gratification if we’re going to become debt-free and enjoy our money.
A quick fix to this problem is to have a 72-hour wait time on any purchase we make. In other words, if we see something we like, we need to put it back, walk away and wait 72 hours before we actually purchase it.
3. Retail Therapy
Ad example: 1970’s Coca-Cole ad, “I’d like to buy the world a Coke…”
The idea that buying something because it will bring you joy is something that’s been around for decades and that old Coke ad is a classic example. It’s all about the idea that going out and buying something will make us feel good. And it does, it brings a rush of joy and exhilaration. For about five seconds.
To move forward and change the way we view money, identifying our retail therapy triggers is the first place to start.
Ask yourself these questions:
- Is shopping a stress reliever for me?
- Is shopping my reward system?
- Do I shop to avoid boredom?
- Does my socializing often involve shopping or do I meet for coffee at shopping centres?
- Do I ever experience guilt or remorse after shopping?
- Are my credit card bills so large that I cannot pay them off every month?
- Do I get an endorphin rush when I shop?
- Do I use payment plans to help make a decision as to whether I can afford it or not?
- Are home shopping shows an entertainment for me?
- Can 0% interest or interest-free periods be a deciding point in my purchases?
- Are there clothes in my wardrobe with the tags still attached?
- Am I on a first name basis with the delivery drivers?
- Have I ever hidden purchases from friends or loved ones?
- Do I buy something thinking “I can always return it” but never do?
If at all possible, we need to avoid using shopping centres as meeting places. If we do, apply the 72-hour rule or leave our cards, money or wallet at home and only take enough cash out for what we’re likely to spend at the coffee shop.
Alcohol, cigarettes, drugs, sex, food, exercise, video games, shopping… we may become addicted to any of these things (the list isn’t conclusive). If we feel the need to do something, if we crave something and we’re unable to control that craving, then we need to address it and we may need professional help to do so. The intent of this article is solely awareness, so that we can begin to identify where we sabotage ourselves and then do something about it.
Ad example: beauty ads
We’ve all been there. Our neighbour pulls up in their driveway with a brand new car and we instantly become a green eyed monster. We instantly start feeling bad about ourselves, our financial situation and our possessions. We feel the need to keep up, to buy something bigger or better (or at least equivalent), just to show that we can do that, too. Or even because we’re worried about what others will think if we don’t do that.
It doesn’t matter how many things we have or what is going on in our lives, when this kind of thing happens, we can feel insignificant, depressed and not good enough. This is when we’ll go and blow a bunch of cash just to feel good enough.
…with celebrities and everything that they buy, even though the majority of these things, such as designer handbags, are out of reach for most of us. We love to see the expressions on our friend’s faces when they see our new purchase, or hear the happy sighs of our children when we buy them some expensive toy or clothes. I’m guilty of spending $1,000 on clothes from Nike or I Am Gia for the kids to keep them happy and make them look good, then hesitating over a $20 pair of exercise leggings for myself. It’s a rush showing off new purchases, particularly if we’re making our loved ones happy. I feel validated, approved of, good enough. In other words, my self worth is linked to the things that I buy and it’s a cycle I have to break to get out of this trap.
I had a conversation with my children and got them onboard with what I was doing. They now get a weekly allowance and they save up and buy their own clothes, and hopefully learn the lesson of delayed gratification (they’re actually much better at it than me!). Then I apply the 72-hour rule: put it back, walk away and see if I still want it in 72 hours. Most of the time, I’ve forgotten about it and I wonder why on earth I felt such an urgent need to buy something a few days’ prior.
6. Relationship with Credit
Something weird occurred to me a few years ago. We bought a new house and along with the new mortgage came – joy of joys – a new credit card. I had ZERO intention of using it but, you know, things happened, I put a few dollars on the card here, a few more there, then – oops, – something big came along and thank heavens I had the credit card, and before I knew it, the card was maxed out and I was only paying off the minimum monthly amount.
The interesting thing is that I viewed that credit card as my money. In my mind, it was the same thing as the cash that I had in my wallet. The only concern was whether we could afford the monthly payment. It’s been the same thought process when we’ve bought new cars, new furniture, even new houses. Most of us believe that our ability to make repayments on debt is a measure of whether we should buy an item or not.
It’s this relationship with our repayment ability that allows us to justify carrying as much debt as we can.
We live to our means. No matter what we earn, we spend it and find ourselves still living paycheque to paycheque, even though it’s a much bigger paycheque. Our (as in mine & John’s) solution has always been to earn more money, it’s never been to get a grip on our finances or to save or even to live within our means. We found it easier – and less confronting – to make more money than to deal with our beliefs around money. In other words, we were complacent about the whole thing, saying to ourselves, ”Oh, we’ll just make more money, it’s not a problem”, which meant the issue just kept pace with our income, it was never resolved.
There’s an old saying that if you look after the pennies, the pounds will look after themselves. Yeah, we never took that onboard. I would go out to a café to work and get lunch. Every day. I justified this by telling myself that my time was better spent in producing content and writing programs than it was shopping and making my own lunch. But again, that’s complacency: we’re not taking care of our money. All of those little things – the morning coffees on the way to work, the lottery tickets, the unused subscriptions, the auto-renewals for products we rarely use, the health insurance that we could get cheaper elsewhere – is us not taking care of our money and it leads us nicely into the next area…
8. Lack of Planning
If we’re ever – ever – going to get ahead, we need to plan. When we’re experiencing money problems, it is easy to disconnect from our spending, lose interest in saving money, and avoid looking at our bank accounts. It’s so much easier to stick our head in the sand and ignore the whole thing until it hopefully goes away.
Only it generally doesn’t. Most of the time it just gets worse (speaking from painful personal experience).
Think about the TV show Dragons Den/Shark Tank. Business owners come in with the hope of one or more of the Dragons/Sharks investing in their idea. The Dragons want to know details of their plans, what the budgets are, what are the projected figures, how they will deal with x, y, z. Inside the Shark Tank or out, no business is likely to get off the ground unless it has a plan, financial and otherwise. Yet most of us think we can go through life without doing the same thing. We rack up more and more monthly payments, accumulate more and more debt, have less and less savings, and blithely put our heads in the sand and pretend everything is okay (I’m totally talking about myself here). It’s so easy to make excuses and feel hopeless and do nothing.
When we don’t have a personal plan and budget…
…we have no clue where we are, where we’re going or how we’re going to get there. We have no idea how we’re spending our money, we have no plan for retirement, or doing anything else. When we don’t budget our money, when we don’t take care of it or pay attention to it, we end up living month to month because we haven’t worked out how we’re going to do things differently. When we do this kind of thing, we end up using our credit cards as our emergency funds (if we haven’t already maxed them out).
Take a step back
If we step back and view our finances like a business, we will naturally develop healthy habits and build wealth.
Think about this for a minute: a business operates off a set of plans — actions that are designed to produce a financially secure outcome. Monitoring our cashflow regularly is a basic requirement to ensure there are reserves available for the inevitable rainy day. A healthy business engages in risk assessment, debt reduction, spending cuts, and works to maximize growth opportunities.
If we want to get out of our money problems, we must plan. Actually, we must have the main Plan A and then the backup Plan B.
9. Not Taking Responsibility
All of this behaviour is simply us not being responsible for ourselves, our money or our lives. If we want to get out of debt and get out of the cycle of living from paycheque to paycheque and always owing people money, all we have to do is get responsible.
That’s it: just be responsible.
Australians are in denial
Here are some facts about Australian’s aged 45 and up from an article in the Sydney Morning Herald titled “Australia's retirement savings gap among the world's biggest”:
- They expect to spend 23 years in retirement but their money will run out after 10 years.
- 45% say they cannot afford to prepare for retirement due to more immediate financial commitments like mortgage and other debts.
- On average, they have $67,000 per person less than the amount needed to fund an ‘adequate' retirement (NB not a ‘comfortable’ retirement).
- 35% describe themselves as “completely unprepared” for retirement
- 51% feel they are “somewhat prepared”
- 14% feel they are financially prepared.
- 25% have less than $50,000 in super
- Only 12% have $50,000 to $100,000 in super.
- 46% are not confident in their ability to be able to maintain a comfortable standard of living once they have stopped working.
“Australians are in denial about retirement planning,” said Graham Heunis, head of retail banking and wealth management at HSBC Australia.**
The problem with being ill-prepared
The thing about being ill-prepared is that it is no one’s fault but your own. Our long list of excuses as to why things are the way they are is the real reason why things are the way they are. We must acknowledge that and take action. There’s no blame, it’s just the way things are, and if they’re like that and they’re not working, change them. That’s all. Instead of putting our energy into self-recrimination, guilt & shame (along with burying our heads in the sand), we can put it into changing things to reflect what’s really important to us. Like being debt free!
(Read this article: Powerful or Powerless – it's our choice)
The realization that you are not prepared may be a bitter pill to swallow because facing the truth can be uncomfortable. The thing is, once we see the cause of our financial problems, we then know where we need to put our energy to get our act together and start saying goodbye to our money problems.
Do then repeat
There we have it: nine ways we sabotage ourselves around money and suggestions on how to fix it. As with anything new, it will take time for it to become an automatic response but if we repeat something often enough, it does become automatic, so the only thing to do is stick with it.
**[Statistics and quote from article: https://www.smh.com.au/money/super-and-retirement/australias-retirement-savings-gap-among-the-worlds-biggest-20150119-12t2l0.html ]