Everybody has habits. There are two kinds of habits: good habits, and bad ones. You need to build up your good habits, or else, your bad habits will take you to the poor house. Many people don’t manage to save money or build up assets because they simply have bad habits. They are hard workers, they try to save, they love their families, theyre responsible people; but in the end, they have little to show for their efforts because of their bad financial habits.
People dig themselves into a hole financially because of the things they do on impulse, and it seems that bad financial decisions just happen to them as a reflex. This is especially true when it comes to spending. There are two things that can put you into a deep financial hole: too much spending and too much borrowing. Use these tips to change your bad habits quickly.
Always think of how long it will take to pay off
Whether youre thinking of borrowing money or spending money on something you dont really need, you have to train yourself into thinking how long it will take you to pay off that loan or that item. This is a great habit to pickup because it will allow you to override your bad shopping impulse habit. There are many reasons why people feel a compulsion to buy stuff even when they dont need it. A lot of these have to do with feelings of validation, feelings of completeness, or keeping up with their friends and family. This is a very strong set of motivations.
However, you can offset those impulses by focusing on the pain of having to pay off that loan or that item that you are thinking of buying. This resets your mind back to reality. Instead of focusing on the benefits or supposed benefits of the thing that you are about to buy or take out a loan for, you reset your mind to the reality that you have to pay it back. And once you start this mental process, you then go back to an even deeper reality of your current financial state.
Think of what you have to sacrifice if you don’t save
If the first tip above doesn’t work for you, then you need to take things up another notch and look at what you will have to lose in order to pay off a loan or pay off the item that you are thinking of buying. In other words, what are the consequences if you dont save? Sacrifice involves giving up something that you normally enjoy or you normally take for granted just so you can do something else. You have to zero in on painful experiences or possibly painful consequences if you undertake all these new debt and these new financial obligations.
What would you have to give up? How much would it hurt? How much of a hassle would it make your life? Focus on these negative things. Feel them. Normally, once you reach an emotional state of pain, the impulses go away.
Remember past bad experiences
If you cant proactively think of painful scenarios in the future arising from your inability to curb your spending, you might want to look in the past and see if you experienced bad things as a result of your inability to control your spending. Chances are you can, if you are honest with yourself. Think back. Experience the pain. Experience the frustration. Experience the feeling of lack of control because you had all these debt to pay off. Now project that into the future, and focus on the item that you are thinking of buying or the loan you are thinking of taking out. If you do this right, you will neutralize the impulse.
Practice these tips regularly. The more you do them, the more they will become a habit. Once you are able to do these regularly, you will be able to suppress your urge to spend too much money, and you would be able to build up assets so you can afford the lifestyle you’ve always dreamed of.