Amy Blacklock works to help others simplify their lives and crack the code on personal finance. Through her website, Life Zemplified, she provides tips and tools to help others save money and achieve money management success. Here is an article from her blog.
Saving money is a pretty simple process. What’s difficult, is changing our thoughts and behaviors about money, power, status, and things. Behavioral science researchers in the United Kingdom suggest six behaviors hinder our money management success.
Without a healthy outlook on money and the power, status, or things we feel it provides, we often fail to plan for a financially secure future. Instead, we get stuck chasing uncatchable prey – eternal happiness and pleasure thrills.
Then, what so often happens is something undesirable – illness, depression, aloneness, death – catches us when we aren’t prepared. Perhaps leaving us both emotionally and financially devastated or worse.
Fortunately, the power to improve our financial lives lies within us. While it may not be easy, we do possess the ability to ignore our wiring for recklessness and achieve money management success. We can improve our financial health.
Why do I believe this?
Because I turned my financial life around. I stopped chasing illusions of success and started reaching concrete financial goals. While I’m not yet financially independent I know I will be someday soon because I read, learn, and practice what it takes to do so.
Not so long ago attaining $1,000,000 in assets seemed improbable, now I know differently. I want you to know too if you don’t already. It took me far too long to find the right financial path. While I wasn’t completely reckless with money or life, I didn’t always respect it and certainly didn’t understand it. Then life changed. Or actually, I did. Life simplified, and things fell into place.
Although I wish I grasped things sooner, I know it does no good to regret it. Sometimes you just don’t know, what you don’t know. And that’s why it’s so important to keep an open mind.
Before you can improve, you need to know what is possible. You also need to know what’s not working and what’s holding you back. This is where I think psychology and behavioral science can help.
Understanding your behaviors and learning to manage them, allows you to gain control. And that’s what I think most of us want. The ability to control our life and money, so money doesn’t control us instead.
Behaviors hindering money management success
Researchers of behavioral science say that despite our own good intentions, we often consistently undercut our attempts to attain a specific goal in a number of ways. This includes sound financial goals.
In Wired for Imprudence, authors “identified ways in which our own natural thinking patterns can make it difficult to manage money well both day-to-day and in the long-term.”
Just because we know what to do – spend less than we earn, eliminate debt, eat at home, etc. – our natural behavior tendencies lead us astray.
Aptly named, these “six behavioral hurdles to financial capability” identified in the paper include:
1. Cognitive overload
Too much on our minds impairs our ability to make decisions and can lead us to choose the simplest but not always the best option.
2. Empathy gaps
Neglecting the needs and feelings of a future ‘us’ in a different situation for a spur of the moment decision based on today’s at the moment feeling often leads to money spent unnecessarily.
3. Optimism and overconfidence
Failure to remove the rose-colored glasses for objective assessment on financial matters could be detrimental due to unwavering and unrealistic expectations.
4. Instant gratification
Indulgence in a thrill today over a larger potential payoff in the future can derail our long-term financial plans.
5. Harmful habits
Poor lifestyle habits cost us today and increase our costs tomorrow due to their recurrence and future costly health impacts.
6. Social norms
Our quest to keep up with others in the pursuit of more stuff or momentary pleasures rarely leads to enduring happiness.
Need help shifting your money mindset?
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