I feel a need to start with this concept, because the first principle in improving habits and implementing a new strategy is to get to the root of things. We live in a world where everyone is constantly being exposed to advertising for the newest…everything. Where name brands and luxury define us. Social media images and influencers are showing you what perfect looks like. I won’t go as far as to say it’s all a lie, but we all know someone who posts about their perfect life online as though we don’t already know their life is actually a complete mess. To an extent, everyone is looking for acceptance, love, and sometimes praise. Unfortunately, we are also living in an age of excess and oversaturation of embellished facades.
Here is the issue. We have to get to psychology of it. Behavioral finance 101. Are you looking over the fence at your neighbor, wondering why they seem to have so much (fancy clothes, expensive cars, the newest tech)? One simple word of advice…stop making assumptions about other people. You have no idea what is really going on in their lives. They could be on the verge of bankruptcy. They could have inherited money. Or maybe they really are successful and like to spend their money. But what does it have to do with you?
I used to coach on the fundamental idea that you have to take ownership of your own situation. Run your own race. This keeps you in control of your actions by clearly defining who you are, what you want, and how to get it. The moment you begin competing with other people is when you start to lose. This is based on the simple fact that you are chasing things, or a perceived image built on STUFF. At the end of the day, it will not bring happiness into your world, even if you do end up acquiring more.
So, now that we have that concept laid out, what can you do about it as it relates to your personal finances? Well, start by getting a written plan in place. Understand your goals. Learn how to manage your personal balance sheet and income statement. Treat your personal finances like a business. And, as a fundamental principle, start learning some concepts that will improve the way you think about debt, financial independence, and overall balance in life. And above all else, try to never spend money that you don’t have. I intend to cover all of this over time, by the way. I also have a 30 minute video floating around out there about mastering some of these concepts to obtain a better life use of your money. It will help you regain control of your own situation and hopefully stop paying attention to what everyone else is doing.
You may be in a situation where your current income is not getting the job done, but we are going to cover a lot of different fundamental strategies you can take to still improve the picture. The point here is to address the most damaging of behaviors, which is excessive spending/borrowing (it’s also the financial lever that is the most controllable). Have you ever met someone who will take out a new loan or credit card just because it was there? I’m sure you have. Lesson 1: always remember to ask yourself “I could get access to these funds, but SHOULD I?”. Debt strategies are not all bad, and there is old wisdom in the value of borrowing money for free. For now, look for ways to stop the bleeding, and do not add to the problem. Your neighbor is not going to pay your bills. You don’t even know for sure if they are paying their own.
Until next time