People in financial trouble sometimes get angry at themselves and do a great deal of self-blame. Perhaps you have kicked yourself for being “weak,” “impulsive,” or “disorganized,” and you’ve wished you were different. This won’t help.
People in financial trouble sometimes feel terribly unlucky, and they blame their misfortunes for producing the mess they are in. Perhaps you too have felt helpless in the midst of circumstances beyond your control, and you’ve wished for some stroke of good luck to set everything straight. This won’t help either.
We all have different personalities and we’re all dealt different cards, but no matter what our current situation, we need effective money management skills to achieve and maintain good financial health. Fortunately, these skills are not a matter of either personality or luck; they are a matter of learning. People in financial trouble can learn the skills and information they need to restore their personal balance sheets. The entire Quizzle web site is devoted to this goal; in my role as resident psychologist, I will focus on this underlying, psychological level, which determines whether people can make use of good financial advice.
Our actions and choices are based on our thoughts. Realistic, logical thinking supports choices that move us toward goals, such as saving money. But we all sometimes have sabotaging thoughts, which entice us off our chosen paths by offering various excuses, rationalizations, and false logic. When we give to this pseudo-reasoning, which always ignores some important aspect of reality, we fool ourselves into making choices that work against our true best interests.
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Savers have sabotaging thoughts, too. But the key, as far as self-control is concerned, is what people do when their minds generate some false reasoning that could lead them astray. Savers generate realistic, practical counter-thoughts which move them back onto the path they want to follow. Anyone can learn how to do this, with some effort and practice.
What Do Savers Know?
1. The future really will arrive.
One way irrational thinking wreaks its havoc is by persuading us that the future is too distant to matter or too unpredictable to influence. For example:
- Sabotaging thought: “I’d love to get all the optional features on this car, and there’s no way to know what the future will bring anyway, so I’m not going to worry about the money.”
People who manage their money effectively have a clear, solid sense of their lives unfolding along a timeline that is, in large part, predictable; actions usually have foreseeable consequences. Such individuals face temptations, but they are able to respond to sabotaging thoughts with something like the following:
- Saving thought: “It’s very unlikely that I’ll either win the lottery or die young of a heart attack, so I’d better hang on to this money and save it toward the down payment on a house. When that time arrives, I’ll be glad I did.”
2. Journeys of a thousand miles are made of a whole bunch of steps.
People who have trouble planning do not understand how small actions gradually accumulate into major accomplishments – or the opposite. Recognize any of these?
- “One time won’t make any difference.”
- “It’ll be okay to make this one exception.”
- “It’s not going to matter if I splurge just this once.”
Savers understand that the sum total of our small, everyday choices is….the life we end up with. Of course one unaffordable purchase won’t, by itself, ruin our futures, but it also won’t improve our lives in any significant, lasting way. Finally, savers know that temptations won’t get any easier to resist in the future, so there’s no point putting off the hard work until tomorrow, when we’ll still be the same person, wishing for the same types of things, and a little bit more broke.
3. Life isn’t necessarily fair.
Overspenders (like overeaters) have a conception of justice that might make emotional sense but isn’t connected to anything realistic. They imagine that the universe doesn’t want them to feel too bad for too long, and that spending money is an appropriate way to make up for other, unrelated misfortunes in their lives. They might fool themselves with false reasoning like the following:
- Sabotaging thought: “After working so hard and scrimping and saving all through graduate school, it is really unfair that I can’t afford a new car. Social workers are so underpaid! Well, you know what? I deserve this, and I’m going to do it.”
Savers don’t enjoy long periods of hard work and deprivation either, but they do not view overspending as a way to correct injustices, because this just doesn’t work. It’s like two wrongs not making a right. A thrifty social worker might feel unjustly underpaid, but she realizes that busting her budget won’t do anything to change that and will have other negative consequences for her life. She might have thoughts like the following:
- Saving thought: “It’s not fair that I can’t afford a new car with my salary – but things will be even more unfair if I get in over my head with debt. And I guess it’s also not fair that a lot of people hate their jobs, while I really like mine.”
4. Overspending is an ineffective stress management technique.
People who get in financial trouble often turn to shopping as a way to cheer themselves up when they’re upset or depressed. Like emotional overeating, it seems to work in the short run, because it distracts and soothes us with a simple form of pleasure. Our internal dialogue might go like this:
- Sabotaging thought: “It’s ridiculous that I have to put up with a boss like that – my stomach is in a knot – I’m going shopping tonight — I need to get my mind off this, and a little retail therapy is the only way to calm myself down.”
Like emotional overeating, overspending doesn’t work even in the medium term, and it leaves us in worse shape than we were before. Savers separate their stress issues from their budgets; they know they can’t solve problems in one area of their lives by creating problems in another area. So they might redirect themselves in the following way:
- Saving thought: “He ruined another day for me — and buying something nice would cheer me up for a moment – but spending money won’t help me deal with my boss, it’ll just make me a little poorer. I’m going to call Nancy instead.”
Thinking is largely a matter of habit, so modifying your thoughts won’t happen all at once. Changing thought patterns always takes some effort and practice, but it can be done – the whole field of cognitive therapy is living proof! If you want to change your personal balance sheet, you’ll need to change the way you think about spending and saving money. Stay tuned to this column, and you’ll see lots more tips for thinking, feeling, and operating like a saver.