money challenge day 2

Money Challenge Day 2: Discover What
and Who is Holding You Back
by Noah Clyman, LCSW-R

​A variety of personal and emotional hurdles can get in the way of making the best financial moves. If a lack of knowledge about your finances is what is standing in the way, then Day 1’s exercise can help you become more cognizant about the facts.
 
Perhaps after analyzing your expenses you still don’t fully understand why you spend the way you do.

​Maybe you felt deprived by your tightwad parents as a youngster, or maybe you’re bored with life and you like the adventure of buying new things. If only you could hit it big on one or two investments, you think, you could get rich quick and do what you really want with your life. As for disasters and catastrophes, well, those things happen to other people, not you. Besides, you’ll probably have advance warning of pending problems, so you can prepare accordingly, right? You could be wrong and it will cost you.

Here are the two most common psychological barriers I observe people face in their attempt to control their spending:

Bending to outside influences

You go out with some friends to dinner, shopping, or to a show. Try to remember the last time one of you said, “Let’s go someplace (or do something) cheaper. I can’t afford to spend this much.” On the one hand, you don’t want to be a stick in the mud. But on the other hand, some of your friends have more money than you do — and the ones who don’t may be running up debt fast.

Some people just have to see the latest move, wear the latest designer clothes, or get the newest iPhone. They don’t want to feel left out or behind the times.
When was the last time you heard someone say that she decided to forego a purchase because she was saving for retirement or a home purchase? It doesn’t happen often, does it? Just dealing with the here-and-now and forgetting your long-term needs and goals is tempting. This mindset leads people to toll away for too many years at jobs they dislike.

Living for today has its virtues: Tomorrow may not come. But odds are good that it will. Will you still feel the same way about today’s spending decisions tomorrow? Or will you feel guilty that you again failed to stick to your goals? If you haven’t set any goals yet, this is a great time to begin. A cognitive behavioral therapist can help you figure out your priorities.

Spending to feel good

Life is full of stress, obligations, and demands. “I work hard,” you say, “and darn it, I deserve to indulge!” Especially after your boss took the credit for your last great idea or blamed you for her last major screwup. So you buy something expensive or go to a fancy restaurant. Feel better? You won’t when the bill arrives. And the more you spend, the less you save, and the longer you’ll be stuck working for jerks like your boss! Just as people can become addicted to alcohol, tobacco, television, and the Internet, some people can also become addicted to the high they get from spending.
 
Homework: Today’s assignment is to observe your relationship to money. Notice how you are feeling when you are spending money? What’s going through your mind? What was happening right before you opened you wallet? See if you have spot some of the underlying motivations for why you spend.