Winning the Financial Tug of War

Automation can be huge in this area. Automation can take the behavior out of personal finance. Which can sometimes be a great thing. I have a past podcast episode feature Adam Costa where we talk all about automation. Check out that episode to learn more: Ep 85 - Automatically Change Your Life with Adam Costa

When it comes to managing money, many of us feel like we're in a constant tug of war. This struggle often stems from not being taught about finances in school, the habits and behaviors we develop early on, and the sheer number of distractions vying for our attention. As a result, even though we know money is important, focusing on it can be challenging. This post will explore these struggles, provide insights into improving your financial situation, and offer practical tips for changing your money habits.

The Financial Tug of War

Many of us were never taught about money management in school. This lack of education leaves us ill-prepared to handle finances as adults. Our financial habits and behaviors often begin in childhood, and without proper guidance, they can lead to significant challenges later in life. Despite knowing the importance of money, other aspects of life—like work, family, and personal interests—often take precedence, making it difficult to focus on our finances.

Early Habits and Behaviors: The habits we develop early in life can significantly impact our financial health.
Competing Priorities: With so many other things demanding our attention, it's easy to neglect our finances.
Lack of Education: Not being taught about money management in school leaves many of us unprepared for financial challenges.

It can be very difficult to balance all the things that we have going on in our lives. It is something that we all deal with. Some common habits that can be hard to break and lead to the tug of war that we all face are things like peer pressure spending, fomo, keeping up with the joneses and so on. How often is it that people are buying a way bigger car than they need or buying things that they feel like they’ve reached a point of success, so now they have to have it. These are all instances of things that have been ingrained in us but we haven’t been taught how to think about it financially.

Personal Struggles with Finances

Our struggles with finances often come down to time and procrastination. We may know what we need to do, but something holds us back. Arguments about money can strain relationships and affect other areas of life. Time plays a crucial role in managing money; if we don't save and plan wisely, we might find ourselves working indefinitely, sacrificing future enjoyment for present comforts.

Time and Procrastination: Delaying financial decisions can lead to bigger problems down the road.
Impact on Relationships: Money issues can cause significant strain in relationships.
Long-term Consequences: Failing to save now can lead to working longer and enjoying life less later on.

Talking about money is how we break free of the personal struggles. So often we feel like we can’t talk about money when that is exactly what we need to do to break through our money struggles. When we talk about it we get people on our side and wanting to see us succeed. Other people can help us stay accountable to our goals and encourage us. Plus, how are we ever going to learn about money if we don’t talk about it with other. I think this is a great place to start and I’d encourage everyone reading to just start talking about money.

Gaining Perspective on Financial Struggles

To gain perspective on financial struggles, it's essential to ask ourselves the right questions. Clarity is the first step toward improvement. Questions like "What is money preventing me from doing?" and "Why do I feel this way about money?" can help us understand our financial issues better. It's also crucial to consider who depends on us to change our money habits and how money is serving us.

Clarity: Asking the right questions can provide valuable insights into our financial situation.
Understanding Money as a Tool: Recognizing that money is a tool to help us achieve our goals can change our perspective.
Dependents and Responsibilities: Considering who relies on us financially can motivate us to make better decisions.

Check out the Money Talking Points to get started with some simple conversations with friends and gain your own perspective.

The 7 Money Talking Points

The SMART Thought Process for Purchases

A practical approach to financial decision-making is the SMART thought process for purchases. This involves being self-aware, understanding your motives, considering affordability, doing research, and thinking about time and opportunity costs. Being proactive and realistic about where your money is going can prevent financial surprises and help you stay ahead.

Self-Awareness: Knowing what you want and aligning purchases with your goals.
Affordability: Being proactive versus reactive and distinguishing between needs and wants.
Planning Ahead: Looking a month ahead to anticipate big expenses and ensuring money is in place.

Becoming more self-aware with our purchases is how we move out of that mindless spending phase into a more aware and conscious effort with our money. It’s how we make easier decision not to buy things. Think of the last thing that you don’t remember buying or don’t remember using. The SMART approach to spending is how we avoid those types of purchases.

Improving Financial Habits

Changing money habits can be challenging, but it's crucial for financial health. Understanding where you are financially and recognizing the need for change is the first step. It's about developing new behaviors and learning to say no when necessary. Changing habits can be like brushing your teeth with your off-hand—it feels awkward at first, but with practice, it becomes easier.

Understanding Your Situation: Recognizing where you are financially and acknowledging the need for change.
Developing New Habits: Learning to say no and making better financial decisions.
Permission to Fail: Accepting that it's okay to make mistakes initially and that improvement comes with practice.

The Importance of Behavior in Financial Decisions

Financial success is not just about math; it's about behavior. Starting with awareness, understanding how money is serving you, and being intentional, focused, and proactive can make a significant difference. Automation, such as direct deposits and automated savings, can help remove some behavioral hurdles and make managing money easier.

Awareness and Intention: Understanding how your money is serving you and being intentional with your decisions.
Proactive Planning: Being proactive and planning your finances can lead to better outcomes.
Automation: Automating financial processes can help maintain discipline and reduce the impact of negative behaviors.

The Role of Accountability Partners

Having an accountability partner can make a big difference in changing financial behaviors. Friends, financial coaches, and supportive peers can encourage you and celebrate milestones with you. Being accountable to someone else can provide motivation and make your financial journey easier.

Support System: Having friends or coaches who support your financial goals can be highly motivating.
Celebrating Milestones: Recognizing and celebrating achievements with others can boost morale.
Accountability: Being accountable to someone can keep you on track with your financial goals.

I love the term Money Buddy when it comes to accountability partners. We already talked about in this blog post how talking about money can spur your friends to help keep you on track. Consider who can be your money buddy and ask them to help you out! I would love to be your money buddy if you need someone to help keep you on track! Send me an email and let’s get talking!

Talking About Money

Talking openly about money can help reduce shame and guilt associated with financial struggles. It can also encourage friends and peers to join you in your financial journey. By discussing money, we can learn from others' successes and failures and become more grateful and excited for each other's progress.

Reducing Shame and Guilt: Open discussions about money can help alleviate negative feelings.
Encouragement and Support: Talking about money can encourage friends to join you in improving financial habits.
Learning from Others: Sharing experiences can provide valuable insights and lessons.

By understanding the tug of war we often have with our finances and taking proactive steps to improve our financial habits and behaviors, we can work towards achieving financial stability and success. Remember, it's never too late to start making positive changes in your financial life.

Self-aware
Motive
Affordability
Research
Time/Opportunity Cost

Listen to Win Your Financial Tug of War with Connor Tyson - 134 for more information on the SMART approach.