4 Money Mental Traps And How To Overcome Them

As a financial professional, I see every kind of financial situation from people just surviving to those thriving! The common difference between the two ends of the spectrum is often the stories (more commonly known as excuses) that we tell ourselves.

I have detailed four of the most common excuses below along with ways to combat and overcome them.

1.  I will save when my income goes up.

This is an all too common excuse and one that never really becomes an issue until that cliff edge moment when you realise “holly crap, I have been working for 10 – 15 years and have nothing to show for it!” The time to save is now, regardless of how much more you might make in the future. The unfortunate truth is that the more you earn the higher your expenditure will creep if you have bad habits from the outset.

Simple solution: Decide on a minimum saving percentage (say 15% of your take home pay) and transfer it automatically each pay period, like a direct debit expense. You will be surprised how quickly the cash piles up and that you don’t miss it!

2.  I work hard. I deserve to spend as much as I want!

A sense of entitlement isn’t always unfounded. Entitlement isn’t always complaining about something that’s free or believing you’re owed something that’s out of your league. Sometimes you just work damn hard and deserve to be rewarded for it. But there’s a difference between deserving something and being able to sustainably afford it. This excuse most often accompanies a high level of credit card debt.

Simple Solution: Giving yourself an end-of-the-month “rock star” amount (say 10% of your take home pay). This allows you to reward yourself for hard work and those feelings of resentment and entitlement may not creep up on you as much! This also eliminates the feeling of guilt that often accompanies “blowing all of your money”.

3.  Money isn’t important to me.

Most people don’t want to see themselves as money centric and so make the excuse that spending their money and stating that it’s not important shows this. The fact is irresponsible spending and not caring is achieving the exact opposite of the desired effect and ultimately makes you a slave to money, which increases the importance to you and not decreases it.
Simple Solution: Take a moment to recognise that money is important to everyone. Then think about why it’s important to you and what it enables you to do rather than have. Once this light bulb is switched on you may find yourself re-thinking that next impulse purchase based on what you’re missing out on and not the actual dollars and cents coming from your bank account.

4.  I’m doing better than my friends

The one sure fire way to do financial injustice to yourself is to compare yourself to your friends or anyone for that matter. By looking outward and reassuring yourself that you are doing better than your friends you are ultimately changing your focus from “how can I be my best” to “at least im not as bad as……….. (insert bad financial management friend).”

Simple Solution: You don’t have the same goals as your friends. Hell, you probably don’t really know what their goals are let alone how much they earn or spend. Stop comparing your situation to those around you and make a list of where you want to be in five, 10 and 25 years. Come up with a financial plan that suits your needs. Instead of comparing yourself to others, compare yourself to your own potential.
Never get to down when you fall off the wagon either, just pick yourself up and continue on your merry way, comfortable in the knowledge that you have a plan and the will power to make it real!
[author image=”http://www.woman.com.au/wp-content/uploads/2013/11/Jason-HS-Colour.jpg” ]Jason Reynolds has been involved in the financial services industry for close to a decade and is the Director of financial advice firm Action Wealth, which specialises in educating individuals to enable them to take control of their financial lives. He practices “preventative financial advice” with an aim to ensure that his clients avoid the typical financial mistakes that lead to lost and wasted time and money. The firm’s mission is to decrease the average age that individuals seek and benefit from quality financial advice by a decade (it’s currently at 45….) and beyond.[/author]


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