When’s the last time you heard someone praised on how well behaved they are with their money? What does it even mean to be “well behaved” with your money?
Since we had pre-school cubbies, we were taught what good social behavior is and why it’s important, but rarely discussed good financial behavior and its importance. Why is this? Worry not, we’ll get to that. Is it a problem? YES if you’re broke, and NO if you’re wealthy. Don’t get mad, I’ll break down my reasoning for that as well. Throughout this post there are a couple things to touch upon:
- The Rich vs. Poor Mentality
- Why Good Financial Behaviour isn’t Discussed
- Defining Good Financial Behaviour
- My First Step to Improving Financial Behaviour
I also want to make it clear that these posts are New Zealand far from expert advice. The intention for this column is to share opinions and information that can be accepted and/or constructively criticized. It’s an open forum for humor and discussion, not stiff nosed recommendations from Bay St. With that said, please enjoy my first blog post! HIP HIP…
Rich vs. Poor Mentality
I mentioned that we should worry about financial behavior if we’re broke and not worry if we’re rich. Many of you were probably caught off guard by that, this is what I really mean though – if we’re broke there’s a good chance that it’s because of not focusing on our financial behavior, which should be worked on. However, if we’re rich, there’s a good chance it’s because we did focus on our financial behavior and built good habits so that we don’t need to focus on it anymore. Richness and poorness are, in my opinion, mental states that manifest desirable or undesirable outcomes. Those who are poor tend to focus on their scarcity and seldom take responsibility for their situation, only attracting more of what they don’t want into their lives. The opposite is true for those who are rich.
All our beliefs work as a filtration system in our lives whereby the quality of the belief determines the quality of the filter, and therefore the quality of our lives. Poor beliefs result in a poor filter that will only retain things that support the belief. Think about it now, what kind of things (or emotions, feelings, etc) would be retained in a poor filter? What about a rich filter? The answers to these questions will help us in determining what good financial behavior really is.
Defining Good Financial Behavior
“Good financial behavior is the result of positive perspectives on money, strategizing to reduce (or eliminate) debt, and ensuring that you and your dependants are financially stable for the present and future.” – Me
- Positive perspectives on money – Focusing on what ways money is increasing or can increase the quality of your life and the lives of others
- Strategizing to reduce (or eliminate debt) – Gathering resources and drafting a plan that will help you eliminate debt and pay for things with cash (except for the house)
- Financial stability for you and your dependants – Saving for retirement, will & estate planning, etc.
Why isn’t Good Financial Behavior Discussed?
Here are my thoughts:
- Taboo Subject – Most of us aren’t comfortable talking about personal finance. Either for privacy reasons or because we don’t have much to talk about, we refrain from bringing this topic up. Even families sometimes exclude this from the important discussions list.
- Income Myth – The belief that as long as we’re making money, we’re ok. This is somewhat true; however, the danger lies in being complacent. When job security is assumed we tend to live a paycheck to paycheck life without fear of that next paycheck not coming. As a result, we feed our need for instant gratification by participating in leisurely activities and postponing core responsibilities such as saving, investing, and making extra payments on debt. The reality is that if you do lose your job or $#!+ does happen, what do you have to support yourself when the income comes to a halt?
- It’s Too Early – Amongst my friends, family, and my clients at the bank I’ve realized that there’s no sense of urgency to plan for our financial future. Check out these examples of “it’s too early” situations:
- Student: I’ll worry about OSAP when I graduate
- New Parent: I’ll open a youth account for my daughter when she’s older
- Young Fiancés: We need a new car, the mortgage down payment can wait
- Most people: I don’t need to save for retirement
My First Step to Improving Financial Behavior
In order to develop positive perspectives on money, eliminate debt and ensure that you and those you love are financially secure you’ll need to assess your financial situation. Assessing our financial situation is much more than just crunching numbers, digesting cash flow and income statements or making love with percentages. Assessing our financial situation is a qualitative approach where we attack the behavior(s) that lead to poor money management. In order to do so our first step is to take responsibility for everything that has doomed our finances. Once we’ve come to terms with ourselves in the mirror we can then dig deeper and focus on the habits that disrupt the financial stream. Lastly, making the commitment to change bad habits and improve good ones is what Dudley locks our chest to prosperity and wealth.
Stay tuned for my next post where I’ll be discussing more on assessing our financial situation. Don’t forget to let me know how you felt about this post – thanks for reading y’all!
