In the United States, a majority of Americans are in debt and under fund their retirement and emergency savings. We are in an age where there is more evidence, statistics and information than ever to show the benefits of having an emergency fund and not being in debt, yet, the average Americans situation is no better off. The question is why, and how do we make changes in our lives to buck that trend?
Changes in life are rarely easy and facts and knowledge do not help typically because they do not get down to the root of the issue, which is our behavior. They don’t account for why we make the financial decisions that we do. They make it so easy, so black and white, that it’s almost a foregone conclusion that everyone and anyone can make these simple changes and end up in a better situation. This is rarely true because financial behavior is a symptom of our emotional and mental state. Debt and lack of savings or not aligning your spending with your values is really a behavioral issue masquerading as a financial issue. Without resolving the behavior issues, the financial consequences will continue to show time and again. There are those that hoard cash out of fear or greed. There are those that spend out of guilt, unhappiness, mental issues such as hoarding, or because they feel they will miss out if they don’t. This is what accounts for why people are where they are, it isn’t due to lack of knowledge.
To better your situation, it starts with deciding that you are going to change and clarifying why you’re doing this in the first place. It could be something like I want to have a 3 month emergency fund, so I don’t have to worry about a job loss, I want to change careers, or to prevent one of life’s sudden unforeseen emergencies coming up and putting me deeper in debt. It could simply be I want to go on a tropical vacation. Figured I would add something fun there. The six suggestions below might help in your journey.
- Determine what you value and align your spending to be in line with your values. Most often we are frustrated with our finances and feel we don’t have enough, not because we don’t, but because we spend so much on other things that really don’t fit into our values and then we try and take the leftovers to fulfill our desires and goals and come up short, which leads to frustration and hopelessness. Be intentional and align your spending first with your values and goals.
- Start slow and acknowledge small victories. Each day that you decide to brew a cup of coffee or to put back that item that you don’t need is a victory, it may only amount to a $25 dollars a week savings, but if you were to resist those urges each week, it would add up to $1,300.00 at the end of the year. $25 x 52 weeks = $1,300.00. There’s a good amount towards your vacation right there.
- Identify spending triggers and find an alternative. If you go on a shopping spree every time your spouse or children drive you crazy or you had a bad day at work, then maybe working out or a night out with friends might be a better solution. Plus you get the added health/mental benefits of exercise and friendship, which truly is priceless.
- Get on the same page with your spouse and learn to compromise. Many marriages fail due to finances and because there is a lack of willingness to “lose”. For the longest time, I dug my heels in because I wanted to save every nickel and dime and it would cause tension because my wife on the other hand wanted to go out and purchase something or enjoy an activity and it would cause tension because we weren’t on the same page. It wasn’t until we started to move towards the middle of our own ideas about money that we found much greater happiness in relation to our finances and our relationship.
- Recognize that it is fine to spend money on the things that you value. Our finances most often are a this or that decision, so sometimes it isn’t about saving money, it is about aligning your spending with your values. Most often I would look back on the months where I felt things were out of control and in reality it was more about where we spent the money than it was about spending the money itself.
- Make sustainable changes. If you like to purchase shoes, buy your cup of coffee in the morning or to grab lunch out at the office then by all means, do so, just make sure you are accounting for that in your budget. Find something to cut out that you feel is achievable and start there. Then as time goes on, you decide where to cut back and where to add. Changes have to be in line with your values and it needs to be sustainable.
In closing, you can make the changes, if you are willing to take the time and effort to do so. This means identifying your values and aligning your finances to meet those values and cutting out those things that don’t align. This doesn’t mean you can’t get your cup of coffee or get lunch out at the office, but it does mean that you are much more aware and focused on how those decisions will affect your value system and then from there you can decide if it is worth it to you. Only you can answer that question and I encourage you to explore yourself or if you are married with your partner to determine the system that works best for you.
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